2023 New York Laws › GOB - General Obligations › Article 11 - Obligations to Make Compensation or Restitution › Title 1 - Compensation › 11-104 - Additional Liability of Drawer.

§ 11-104. Additional  liability  of  drawer.  1.  Notwithstanding  any
contrary provision of law, a drawer negotiating a  check  who  knows  or
should  know  that  payment  of such check will be refused by the drawee
bank either because the drawer has no account with such bank or  because
the  drawer  has  insufficient  funds on deposit with such bank shall be
liable, except as provided in subdivision four of this section,  to  the
payee  who  has  presented such check for payment, not only for the face
amount of the check but also for additional, liquidated  damages,  where
the  check  is dishonored and the drawer fails to pay the face amount of
such check within thirty days following the date of mailing by the payee
of the second written demand for payment as provided in this section.
2. In the case of a drawer negotiating a check  who  knows  or  should
know  that  payment  of  such  check  will be refused by the drawee bank
because the drawer has no  account  with  such  bank,  such  additional,
liquidated  damages  shall be in an amount to be determined by the court
in light of the circumstances, but in no  event  shall  such  amount  be
greater  than  twice the face amount of the check or seven hundred fifty
dollars, whichever is less.
3. In the case of a drawer negotiating a check  who  knows  or  should
know  that  payment  of  such  check  will be refused by the drawee bank
because the drawer has insufficient funds on  deposit  with  such  bank,
such  additional,  liquidated  damages  shall  be  in  an  amount  to be
determined by the court in light of the circumstances, but in  no  event
shall  such amount be greater than twice the face amount of the check or
four hundred dollars, whichever is less.
4. The drawer shall not be liable to the  payee  for  the  additional,
liquidated damages provided for by this section if:
(a)  The  drawer  gave  such  check  as  payment  for  the  rental  of
residential premises; or
(b) The drawer gave such check  as  payment  for  residential  service
supplied by a gas, electric, steam, telephone or water corporation; or
(c) The drawer gave such check as repayment of all, or a portion of, a
debt secured by collateral which the payee has repossessed.
5.  Defenses  which  may be asserted against any person not having the
rights of a holder in due course, as specified  in  sections  3-306  and
3-408  of the uniform commercial code, shall be available to a defendant
in any action or proceeding in which  additional  liability  is  claimed
under this section.
6.  The  additional  liquidated  damages  provided for in this section
shall be available only to those  persons  or  entities  which  post  or
otherwise  give  conspicuous  notice  to  the  public of the additional,
liquidated damages which may be imposed pursuant to this  section.  Such
notice  shall  set  forth  the additional liquidated damages that may be
imposed if a check is dishonored and  the  section  of  law  authorizing
imposition  of  such damages, and provide notice that criminal penalties
also may apply.
7. The first written demand for payment on the dishonored check  shall
be in the form prescribed by subdivision eight of this section and shall
be sent to the drawer's last known residence address or last known place
of  business  by  first  class mail and by certified mail return receipt
requested with delivery restricted to the drawer, on or after  the  date
the  payee  received  notice  that  such  check had been dishonored. The
second written demand for payment on the dishonored check  shall  be  in
the form provided in subdivision eight of this section and shall be sent
to the drawer at the drawer's last known residence address or last known
place  of  business  by  first  class mail on or after the fifteenth day
following the date of receipt of the first written demand for payment.
8. The written demands for payment required by  subdivision  seven  of
this  section, shall be in the following form and shall be printed in at
least ten point type in both the English and Spanish languages:
DEMAND FOR PAYMENT OF DISHONORED CHECK
 
DATE:                                1ST NOTICE
2ND AND FINAL NOTICE
TO: _____________________            WARNING: YOU MAY BE
NAME OF DRAWER                   SUED 30 DAYS AFTER
_____________________            THE DATE OF THIS
_____________________            NOTICE IF YOU DO
_____________________            NOT MAKE PAYMENT
 
LAST KNOWN RESIDENCE ADDRESS
OR PLACE OF BUSINESS
 
YOUR CHECK IN THE AMOUNT OF $___________ DATED____________________
PAYABLE TO THE ORDER OF__________________ HAS BEEN DISHONORED BY
THE BANK UPON WHICH IT WAS DRAWN, BECAUSE:
________YOU HAD NO ACCOUNT WITH THAT BANK.
________YOU HAD INSUFFICIENT FUNDS ON DEPOSIT WITH THAT BANK.
IF  YOU DO NOT MAKE PAYMENT, YOU MAY BE SUED UNDER SECTION 11-104 OF THE
GENERAL OBLIGATIONS LAW TO RECOVER PAYMENT. IF A  JUDGMENT  IS  RENDERED
AGAINST  YOU  IN COURT, IT MAY INCLUDE NOT ONLY THE ORIGINAL FACE AMOUNT
OF THE CHECK, BUT ALSO ADDITIONAL LIQUIDATED DAMAGES, AS FOLLOWS:
--IF YOU HAD NO ACCOUNT WITH THE BANK UPON WHICH THE CHECK WAS  DRAWN,
AN  ADDITIONAL  SUM  WHICH MAY BE EQUIVALENT TO TWICE THE FACE AMOUNT OF
THE CHECK OR SEVEN HUNDRED FIFTY DOLLARS, WHICHEVER IS LESS; OR
--IF YOU HAD INSUFFICIENT FUNDS ON DEPOSIT WITH THE  BANK  UPON  WHICH
THE  CHECK WAS DRAWN, AN ADDITIONAL SUM WHICH MAY BE EQUIVALENT TO TWICE
THE FACE AMOUNT OF THE CHECK OR FOUR HUNDRED DOLLARS, WHICHEVER IS LESS.
 
PLEASE MAKE PAYMENT IN THE AMOUNT OF_______ TO:
____________________________________________________________________
NAME OF PAYEE
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
ADDRESS TO WHICH PAYMENT SHOULD BE DELIVERED
IF YOU DISPUTE ANY OF THE FACTS  LISTED  ABOVE,  CONTACT  THE  PAYEE
IMMEDIATELY.
9.  The  public  service  commission shall study the extent to which
checks given in payment for residential service  supplied  by  a  gas,
electric,  steam, telephone or water corporation are dishonored either
because the drawer had no account with the bank on which the check was
written or because the drawer had insufficient funds on  deposit  with
such  bank,  including  the extent of chronic payment with checks that
are dishonored and  the  impact  of  such  dishonored  checks  on  the
operating  costs  of  these  corporations  and their requests for rate
increases, and whether any penalty for dishonored checks, in  addition
to  recovery of the utilities' administrative costs, is necessary. The
commission shall report to the governor and the legislature  no  later
than one year after the effective date of this section.