Question:  We have a customer who wrote a check in 2006, then placed a stop payment on it. The stop payment expired, and the customer did not renew it.  The check was recently presented and our bank paid it.  The customer is claiming that it is a stale dated check and, as such, the bank should not have paid it. Like all other banks, we use an automated process to handle checks and do not look at the dates on checks.

Answer:  Texas Business & Commerce Code §4.404 states that a bank is under no obligation to pay a check that is presented more than six months after its date, but it may charge the customer's account for a payment made thereafter in good faith.  [Emphasis added.] The question then becomes:  "What is good faith?"  Good faith is defined in Business & Commerce Code §1.201(b)(20) as: "...honesty in fact and the observance of reasonable commercial standards of fair dealing."  I think that it is arguable that the bank acted in good faith because it acted in accordance with reasonable commercial standards when it processed the check using an automated process.  Nevertheless, the UCC Comment to §4.404 says that a bank would not normally pay a stale dated check without consulting with the customer.  Further, the Comment provides that a bank is not required to pay the stale dated item, but it is given the option to do so because it may be in a position to know that the customer wants it paid.  Although I did not find any Texas cases supporting the proposition that payment of a stale dated check through a bank's automated payment system is considered good faith payment (because the bank is using a reasonable commercial standard), there are federal cases from other jurisdictions that have recognized this. [See Scott D. Leibling, PC v. Mellon PSFS (NJ) NA, 311 NJ Super. 651, 710 A2d 1067, 35 UCC Rep. 2d 590 (1998)]