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New York Businesses Collecting the Money Customers Owe

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Most New York businesses have been involved in fee disputes; where you’re trying to collect for goods or services you’ve sold to another. You know you lived up to your end of the bargain; you gave your customer/client what they asked for. All you want them to do is to live up to their responsibilities; i.e. pay you the price they agreed to, but they don’t, haven’t, and won’t. They always come up with an excuse. They haven’t had the time to get to it; they’re waiting on someone else to pay one of their bills; the check is in the mail. The bottom line, though, is they still haven’t paid the fee they agreed to.

Sometimes, the customer/client does pay something, though it is less than the full amount. Even though it is a partial payment, they indicate right on the check that it is in full satisfaction of all fees they owe you. Many times they’ll even cite a statute which they claim backs them up. Many businesses do not know what to do when they face that situation. Often they panic. Though they need the money and are entitled to it, after all they did earn it, they are afraid that if they cash that check they’ll forfeit their right to collect the remaining balance of the fees from the customer/client. As a result, they often don’t deposit the check; some return the check, and others deposit the check but fail to pursue the customer/client for the remainder of the fees.

At least in New York, there is a way around this problem. Under UCC 1-207, the recipient of just such a check can deposit the check and still maintain its right to proceed against the customer/client to recover the remainder of the money owed to it. Under that statute, a depositor can put a restrictive endorsement on the check before he puts it in the bank to collect the proceeds. The endorsement will include words that make it clear that the depositor does not forfeit his rights under the purchase or sales agreement. These could include such phrases as: Deposited Under Protest/With Reservation of Full Rights/Pursuant to UCC 1-207. At the very least, this will allow a business to live to fight another day; it won’t guarantee that you’ll recover the money you’re owed, but it won’t foreclose your ability to try to collect it. At the same time, it will let you deposit the check you’ve been given, collect at least some of the money you’re owed, and thereby make the dispute smaller and, perhaps, more manageable. When the economy is poor, this is something that businesses should be able to utilize to boost their bottom line. It may not be much, but then again, in times like these, every dollar does count.

This is a complicated but common problem encountered by many New York businesses, which we will be spending much time over the coming weeks discussing in detail.

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