Question

If a business does inadvertently cash a "paid-in-full" check, it has _______ days to offer the debtor repayment in the same amount.

1) 120
2) 90
3) 30
4) 60

Answer 1

A business that cashes a "paid-in-full" check by mistake has 90 days to return the payment amount to the debtor to maintain their right to the full debt.

Step-by-step explanation:

If a business does inadvertently cash a "paid-in-full" check, it has 90 days to offer the debtor repayment in the same amount. This practice is rooted in contract law, where the acceptance of a check marked "paid in full" could be considered as an agreement to the settlement of any disputed amount.

However, regulations typically provide a grace period for businesses that cash such checks without intending to settle the debt in full. During this 90-day period, the business can rectify the situation by returning the payment amount to the debtor, thereby preserving their right to claim the full debt owed.