The problem is that it’s a bank draft, not a cheque. The whole idea of a bank draft is that it’s guaranteed by the bank, so it can’t be unilaterally cancelled after it’s been issued. It’s why you only accept a bank draft when selling a used car; once you have the bank draft, the other party cannot cancel it. The funds have already been removed from their account and are being held in trust by the bank.
It’s a sticky situation. TD doesn’t want to be on the hook for $300K should the original draft be deposited, but they can’t cancel their obligation to that bank draft unless it is surrendered to them.
Meanwhile, Canada Post doesn’t insure mail to the tune of $300K. They would have needed to buy separate insurance ahead of mailing the draft.
I don’t see how this can be resolved at this point, even with media attention. $300K of cash should not be sent in the mail without adequate insurance.
Essentially, how would this story be different if they were literally shipping a box of cash by registered mail? I think it’s pretty clear that that’s a very risky thing to do.
Imagine a bank robbery and the robbers demand the tellers issue a bank draft / certified check to the robbers actual name.
At the end of the robbery the bank has, a serial number of the check, the payer name.
It would be silly to expect this bank to honor this bank draft / certified check. They simply wouldn’t do it.
So the rest of the “we can’t prevent double spend of this bank draft”, is silly. They can verify the payee, pay the draft and cancel the original draft by serial number.
But the New York Credit Union Association cites §3-403(2) of the UCC. This section indicates that payment can be stopped on a certified check if 90 days have passed since it was issued and the check has been lost, destroyed or stolen. The remitter would have to submit an affidavit to the bank or credit union in this case and request a stop payment order in writing.
The CP admitting that they lost the check should suffice as evidence that the cheque has been “lost, destroyed or stolen”.
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The problem is that it’s a bank draft, not a cheque. The whole idea of a bank draft is that it’s guaranteed by the bank, so it can’t be unilaterally cancelled after it’s been issued. It’s why you only accept a bank draft when selling a used car; once you have the bank draft, the other party cannot cancel it. The funds have already been removed from their account and are being held in trust by the bank.
It’s a sticky situation. TD doesn’t want to be on the hook for $300K should the original draft be deposited, but they can’t cancel their obligation to that bank draft unless it is surrendered to them.
Meanwhile, Canada Post doesn’t insure mail to the tune of $300K. They would have needed to buy separate insurance ahead of mailing the draft.
I don’t see how this can be resolved at this point, even with media attention. $300K of cash should not be sent in the mail without adequate insurance.
Essentially, how would this story be different if they were literally shipping a box of cash by registered mail? I think it’s pretty clear that that’s a very risky thing to do.
It was a certified cheque, not a bank draft. Granted, that poses much the same problem.
Imagine a bank robbery and the robbers demand the tellers issue a bank draft / certified check to the robbers actual name.
At the end of the robbery the bank has, a serial number of the check, the payer name.
It would be silly to expect this bank to honor this bank draft / certified check. They simply wouldn’t do it.
So the rest of the “we can’t prevent double spend of this bank draft”, is silly. They can verify the payee, pay the draft and cancel the original draft by serial number.
This is US law, maybe Canada has different rules, but:
https://www.sapling.com/8611754/do-void-certified-check
The CP admitting that they lost the check should suffice as evidence that the cheque has been “lost, destroyed or stolen”.