Who's paid for the goods?

[eteb3]

The legal position is that if you accept a cheque in payment, this is the same as accepting cash (unless and until it's returned unpaid): buyer has no further liability.

Where the buyer pays with their own cheque, it's all nice and simple: buyer has paid seller.

Now suppose buyer pays with a cheque made out by a third party, payable to seller, drawn on third party's own bank, which was given to the buyer by the third party for this purpose.

Who has paid seller?

(not a homework question - charity wishes to provide the deposit for beneficiary's lease, but can't give beneficiary cash to do so or this would be regulated lending. There's also a need to have rights under deposit protection scheme, and there is finnicky language about paying 'on behalf of' tenant.)

 

[kulture]

It is confusing when at one point you talk about buyers and sellers and then talk about a lease and deposits. Which is it?

I fail to see why giving cash would be lending but giving a cheque is not. This all sounds overly complex and I suspect that you need to get proper legal advice.

 

[eteb3]

when at one point you talk about buyers and sellers and then talk about a lease and deposits. Which is it?

Sorry. It was just because buyer & seller is a tidy example to show that giving a cheque to a trader is like paying him cash

I fail to see why giving cash would be lending but giving a cheque is not.

If we give her cash to give to the landlord, then she owes us the cash. If we give her a cheque payable to the landlord it may be different: she is not the payee and so she never sees the funds.

But then she has given a cheque so maybe she is held to have paid, not us, so we lose our legal protection from paying on her behalf

Thanks for enduring my garbled question

 

[Ziggy2024]

I agree that this would be a loan regardless of the method of payment so not sure the cheque would solve your issue. I guess a way around it would be to loan money to a trustee or employee but it feels wrong to me.

The deposit protection would cover the tenant (from my vague memory of the system) so potentially the tenant may be able to retrieve this money at the end of the term rather than it coming back to you.

 

[eteb3]

The deposit protection would cover the tenant (from my vague memory of the system)

Covers the tenant and anyone who pays the deposit “on behalf of the tenant in accordance with arrangements made with the tenant” (or words to that effect). Thinking about this, it would cover us even if the landlord didn’t know about the arrangements.

Which means we can give the cash to her as our trustee, she’ll hold her property in the deposit as our trustee, and as our trustee has to account to us for the deposit.

And that’s not credit because there is no existing debt; only a contingency that the deposit will not be repaid in full.

Problems solved (I think) with thanks to you both!