Opinion ID: 534895
Heading Depth: 1
Heading Rank: 6

Heading: Equitable Balancing

Text: 25 Defendant contends that its position is supported both by the U.C.C. and equitable considerations. The loss to the plaintiff was not due to the defendant's delay in returning the check, Far West Bank maintains, but to the lack of funds in the drawer's account. As the plaintiff dealt with the drawer of the check and was not prejudiced by the defendant's late return of the item, defendant asserts that the plaintiff should bear the loss. However, policies support the final payment rules and the placement of the loss on Far West Bank, as the payor bank. As stated by two commentators: 26 If every payee who took a personal check from a customer faced the prospect that he would be at risk to return funds received from a payor against NSF checks until a three--or five--year statute of limitations had run, commerce would be stultified. Faced with that possibility, merchants would not treat checks as the equivalent of cash and might instead insist upon cash or some other mode of payment that could not be reversed for such a long period.... Therefore, it seems clear, at least as checks are currently used in our society, that prompt response in the case of NSF funds checks is an integral and probably critical part of the bank's performance. 27 J. White, R. Summers, Uniform Commercial Code Sec. 17-2, at 826-27 (3rd ed. 1988). 28 In addition to the policy of bringing certainty and finality to commercial payment transactions that is behind the check clearing provisions of the Uniform Commercial Code, imposing liability on the defendant places the loss on the party who can best prevent it, as the payor, not the payee, is in a position to determine the exact balance in the drawer's account. Consequently, we conclude that the loss should be placed on the defendant, as this will facilitate the use of the check as a medium of exchange and promote expediency and finality in the bank collection process.