Uniform Commercial Code Essay

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Let’s talk about your corporate checking account. The Uniform Commercial Code (UCC) is a nationwide law that regulates how banks handle negotiable instruments, such as checks. In Massachusetts, Articles 3 and 4 of the UCC address check fraud specify how losses from forged checks should be allocated. According to the UCC, a bank can charge items against a customer’s account only if they are properly payable and the check is signed by an authorized individual [MGL 106, UCC 3-401(a) and 4-401(a)]. According to your bank’s deposit account agreement both of you have been designated as the only authorized signors on the account. I think it’s safe to say that since Jane forged your signatures on several checks, those checks were not properly authorized. From what I understand all the checks were payable to Don with the exception one which was payable to “cash” and given to the church. The UCC views the check payable to “cash” as a bearer instrument. What this means is that since the church had possession of the check they…show more content…
This may be our best defense in recouping on some of the lost funds. We could say the bank did not exercise ordinary care in that they didn’t have a check verification process in place to monitor for valid signatures and valid endorsements. In fact, there have been cases where banks have been held liable as the result of failing to act with reasonable ordinary care by not performing these duties. I would support this with the case of Lund v.Chemical Bank where the courts found that “a bank’s failure to follow its own internal policies and procedures is unreasonable”, thus the bank was held

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