I sent a copy of an unsigned check to a vendor to show good faith, that we were in the process of generating a payment for his services. I told him a signed check would take a bit longer. He took the unsigned check and processed it as an e-check. I was not aware he was doing this, but he believes he told me. I never sent the signed check or signed contract, as the project was ultimately not approved by management. Now the vendor is saying that the payment cleared (via an e-check process) and he has spent the funds starting our project. What is our recourse?
Sending an unsigned check was a bad idea. We don't believe this is any demonstration at all, but that is moot.
The payee should not have cashed the check and abused the system by processing an unsigned check. There was no valid order to pay. Your bank has told you in your original agreement that you had an obligation to review your statements and tell them about checks you didn't authorize. This may be thirty days after they send you the statement that this has to be done, or it could vary from that period. In any case, call your bank and tell them this check wasn't signed and wasn't to be cashed. They will credit you and work on getting the funds back from the bank that paid the vendor. In the future, don't send a payment order, the check, unless you mean for it to be paid.
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Sending an unsigned check was a bad idea. We don't believe this is any demonstration at all, but that is moot.