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CHEQUE STOP PAYMENT LETTER

WHAT IS A CHEQUE STOP PAYMENT LETTER?

A cheque stop payment letter is a letter that's written by a person who has issued a cheque and wants to stop payment on that cheque. Its only purpose is to not allow the holder of the cheque to encash it from the bank. There are various reasons as to why such a letter is usually written. The standard process is once you issue a cheque to an individual, he's
entitled to encash it at his will. But in circumstances where you'd wish to prevent the holder of the cheque from encashing it, you have to write down this letter to the bank.

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WHAT INFORMATION MUST BE INCLUDED WITHIN THE LETTER?

It is important to incorporate the subsequent information within

the letter:

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  1. Person’s name the cheque is in favour of

  2. Date of issuance of the cheque

  3. Value

  4. Cheque number 

COMMON REASONS FOR CHEQUE STOP PAYMENT

There may be several reasons that someone might want to prevent a person from cashing in
a cheque. The foremost common reasons are:

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  • When the person issued the cheque for purchasing products/services but finds that the

    products/services are defective in a way or has not even received delivery of the said items.

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  • If the cheque gets stolen or lost 

WHO CAN ISSUE A CHEQUE STOP PAYMENT LETTER?

Issued by a corporation
or an organisation

The cheque stop payment letter could also
be printed on to a paper with the corporate letterhead or with the corporate logo. It should
be addressed to the banker and it's a standard practice for companies and organisations to
affix their seal on to the letter for identification.

Issued by a person

In the case where the cheque was issued by an individual, the letter could also be printed on a plain A4 size paper.

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