Cancellation of a Lost Instrument, Payment Ban and Return of the Instrument
If a check, promissory note or bill of exchange is lost, stolen, destroyed or leaves the rightful holder’s hands against that person’s will, cancellation of the lost instrument and a temporary payment ban may come into question. The purpose of a cancellation action is not to eliminate the debt but to make it possible to assert the right without the instrument and to prevent the instrument from being used by an unauthorized person.
In this context:
- Determining the status of rightful holder and legitimate holder
- Establishing the identifying details of the instrument
- Explaining the event of loss, theft or destruction
- The payment ban and notice to the bank or the debtor
- The announcement and waiting process
- An action for recovery if the person holding the instrument comes forward
- Asserting the claim after the cancellation decision
- Managing the risk of a forged or duplicated check
- Links with bank, enforcement and criminal files
are addressed. If it is known who holds the instrument, a return of the instrument or a route of recovery may need to be considered instead of cancellation. In a request for a payment ban, prima facie proof, security and the possible rights of third parties must be taken into account.
The First Step for a Lost Instrument
Establish the document’s number, amount, and issue and payment details, images of its front and back, and who last held it. Record the date on which the loss was learned and how the event occurred. Notice to the bank or to the police does not by itself mean that a court has issued a payment ban decision.
A cancellation action does not erase the debt
Cancellation is protection aimed at enabling the rightful holder to assert the right without the instrument. Who may bring the action is examined on the basis of the type of instrument, the status of rightful holder and the situation at the time of the loss. Being the issuer does not by itself give the right to bring a cancellation action in every case.
If the person holding the instrument is known
A return of the instrument or a route of recovery may be required. Relevant conditions such as the holder’s acquisition, bad faith or gross negligence are assessed. The time limits for bringing an action given during the cancellation process must be tracked.
Two different notions of recovery
Taking back the physical instrument and demanding the return of money paid under the threat of enforcement without being owed are different claims. The parties, the proof and the time limits are determined according to this distinction.