Case Analysis: Banking & Forgery Essay Examples & Outline
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Case Analysis: Bank Cheque
The case is concerned with the issuance and later cancellation of a cashier’s cheque that was drawn by a Mary Chirstelle as a payment to another party. Mary Christelle bought the cashier’s cheque and later asked Charter One not to pay it. The bank gave the stop-payment order to the payee’s bank, Mid America. Charter One proceeded to refuse making any payments on the cheque after it was presented back to it for payment. The Mid America proceeded to withdraw the amount from the account of the Essential Technology Illinois. After the deduction of the amount, the account balance reduced to a negative figure (Veltri, 1199).
Mid America sought a legal redress against Charter One to recover the entire value of the cheque, the legal fees and the total interests accrued. The suit was filed citing the UCC 810 ILCS 5/3-11. The defendant responded to the compliant by admitting that the issuance of the stop payment order was in accordance with the requirement that the stoppage be made if the cheque was drawn according to the mistake or presence of fraud. The defendant also filed a complaint against Mary Christelle for the damages accrued.
The proceedings indicated that the initial attempt to deposit the cash using a personal cheque was rejected owing to the insufficiency of the funds. Coincidentally, the same amount was deposited using the cashier cheque that was bought at Charter One bank. Mid America bank proceeded to make payments to the payee even when the stop payment odder has been issued. There were no signs of fraud after investigations by ETI. However, few issues are worth noting thus far.
One of the most notable issue is the fact that there had been an attempt to deposit the same amount to Mid American using a personal cheque. However, the attempt did not succeed since the personal account of the depositor had insufficient funds (Veltri, 1199). The relationship between the depositor and the payee also raises issue with the turn out of the events.
The issuance of stop payment orders only occurs when the cheques is lost stolen or destroyed. In this case, none of the above outcomes had manifested. In this case, the bank can seek identification from the people or person that placed the purchase order for the cheque. There is also a need for the issuance of an affidavit in support of the stop payment order. In the case mentioned above, there were insufficient grounds for the issuance of the order since the cheque was not lost and neither was there any damage.
The order was also placed without issuance of an affidavit to that effect. Stoppage of payment on the cashier cheque was also contrary to the universal commercial code of Illinois since the stoppage can only be undertaken if the item is drawn on the account (Veltri, 1199). The cashier’s cheque was not drawn on the account of Mary chrysotile hence it could not be stopped under the code.
Issuance of the stoppage order on payment is not a right to the customers that use the cashiers or teller’s cheques. However, the bank may issue the stoppage orders under the request of the customers as a way of accommodating the customer requests but not as an obligation. Charter One was accommodating Michele when issuing the order. There was no right to ask for stoppage of payment after the delivery of the same to the bank.
Therefore, the stop payment order was not implementable owing to the blatant contradiction of the code. Charter One banks argued that the cashier’s cheque was no longer a cash equivalent hence could not be treated in the same way with cash. Therefore, the stoppage of the cashier’s cheque was allowed. However, the conditions warranting dishonoring of the cheese were no longer applicable in this case.
The banks brought up another conventional issue. One of the notable issue was the fact that the banks asserted that there was a loss of interest during the period when the case was proceeding. The assertion has basis since the bank could have been operating with the cash that it had backed up the cheque with. It could also have continued discounting the cheque to the people on demand (Veltri, 1199). This leads to the assertion that the bank lost the cast that it could have otherwise made when the cash was not issued or when the cheque was discounted. Since the cashier’s cheque is a cash equivalent.
The loss of cash and the associated damages also count in this case. Mid America bank could have used the cash that it used to back up the cheque as collateral for other businesses. It could have also issued the money to the borrowers that come to the bank (Veltri, 1199). However, the loss of the cheque and the period during which the cheque and the court case was in proceeding, the back was not capable of receiving the benefits that it could have attained. Therefore, the interest ought to be paid according to the prevailing interest rates.
Veltri, Stephen C., and Greg Cavanagh. "Payments." Bus. Law. 64 (2008): 1199.
Chase Signature Forgery
Chase is certainly liable for the forged checks. This is because every bank is required to have a signature card that is intended to verify the signature of the depositor. Therefore, for this reason Chase should pay only valid checks that are drawn on the deceased’s bank’s account regardless of whether the depositor is dead or not. The law states categorically clear regarding a signature that a person is not liable on an instrument unless the person signed the document or the person is represented by either an agent or a representative who signed on the instrument. However, this agent or representative signature must be binding to the represented person according to section 3-402. The work of a signature is often to authenticate a writing, and it may be done so in either a manual way or by the means of a machine or a device. Therefore, if it was not the signature of the deceased this means that he was not liable for the mistake that the bank made for not verifying the signature.
Further, in banking laws, it is clear that unless otherwise provided, an unauthorized signature can be described as ineffective except when the signature of the unauthorized signer is in favor of a person who in good faith pays for the instrument or pays the instruments or even takes it for value. Therefore, the unauthorized signature on the checks that were presented to the Chase bank were therefore not a property of the deceased and for this reason he cannot be described as being liable for the mistake that occurred on the part of Chase bank cashing in on fraudulent checks with fake signatures.
Before the signatures had been forged, Chase bank had been advised by the attorneys of the deceased regarding his status. Therefore, the bank could have taken this into consideration regarding to whether or not to pay the 12 checks. Further, this could also have triggered their skepticism regarding the checks and make sure that the signatures on the checks were valid. The depositor had deposited his money in the bank with the intention of keeping it safe from intruders and other common thieves. The only thing that made this sure was his signature and therefore, it was the responsibility of the bank to ensure that it protected the money of the deceased.
Therefore, in terms of liability it is the problem of the bank as they are the ones that were negligent on their part and did not look at the signature carefully and therefore, released money despite the fact that they had been warned by the depositor’s attorneys regarding his death. The estate should therefore, not be liable to anything as they did nothing wrong but all that happened was that the bank did not take their work seriously and cashed in on checks that were clearly forged.
In conclusion, Chase is liable for the gorged checks because they had in their possession a signature card that they could have used to double check the signature. Further, they had been given information regarding the death of the depositor and for this reason they could have taken more care in order to ensure that the depositor’s money was protected. Lastly, the bank laws state that an unauthorized signature is not the fault of the depositor and consequently, the deceased or the deceased attorneys were not liable.
Williams, H. C., & American Bar Association. (2006). Federal banking law and regulations: A handbook for lawyers. Chicago: American Bar Association.
Finance & Business Essay: Waterloo Merchant Bank
A merchant bank is a bank that combines both banking and consultancy services. This bank provides advisory services to its clients where it involves them in financial, marketing and legal matters surrounding them (Gurusamy, 2009). Its main aim to its clients is to provide advice and guidance on investments at a given cost. These types of banks are important to the society as they provide while starting their own businesses (Gurusamy, 2009). On the other hand, they act as sources of capitals to these businesses and as well helps the already started businesses in expanding and modernizing. Restructuring of a business is another advantage attributed to the merchant banks.
Merchant banks such as Waterloo have a great significance in the economy of a country. This is because they initiate companies in registering, buying and as well selling their shares in the stock exchange. In general, a merchant bank is a bank that goes beyond the normal banking services to its clients. Therefore, Waterloo, as a merchant bank provides a wide range of services to its clients (Gurusamy, 2009). These services start from initiating a business to running the business effectively. Despite the significance of merchant banks in the society, they are faced by some challenges. These are both internal challenges and as well external challenges resulting from social setting and economic nature of the country. He internal challenges of merchant banks include mismanagement of resources and as well poor leadership skills with the bank officials. The essay will focus on a case of Waterloo which faced mismanagement of its funds by its officials.
As stated earlier, mismanagement of resources is among the greatest challenges facing merchant banks (Gurusamy, 2009). Waterloo was a merchant managed by Peter. As a managing director of the bank, he had the authority to enroll staffs into the bank. He successfully appointed Allcard who was his best friend, as a finance manager. However, this brought about issues in the bank. After enrolling Allcard, both Peter and Allcard engaged in misusing of resources. This was an internal mismanagement of resources. As a result, the merchant bank decides to file a case against the two workers for the misuse of resources. This is a form of corruption since the Waterloo’s resources were not used for the intended purpose (Gurusamy, 2009).
Considering Peter’s case, different measures can be implemented to deal with their corrupt nature. Waterloo Limited took the initiative to file a case against Peter. This is a legal measure that will allow the merchant bank to recover its lost resources. Advising the involved parties, it requires understanding the nature of the mismanagement committed by Peter and Allcard. On to the Merchant bank (Waterloo); the legal action taken is according to the law governing companies (Gurusamy, 2009).
This measure is not only important in acquiring the mismanaged resources but also as a governing tool to other workers in the company. Legal requirement of companies and banks require them to have financial audits who audit their record book aiming at identifying frauds in the company. This measure aims at dealing with corruption activities in bank (Gurusamy, 2009). On this case, Waterloo, need to develop and implement adequate tools and methods for the audit and the evaluations in order to acknowledge the presence of mismanagement by Peter and Allcard. On the other hand, in order to prevent other cases of corruption in the bank, Waterloo requires establishing a competent and independent investigative agency that aims at investigating corruption and other mismanagement practices in the merchant bank. These are some of the measures that Waterloo can focus on while dealing with the case of Peter and All card.
Both peter and Allcard face the case for engaging in the mismanagement of the bank’s resources (Gurusamy, 2009). This party faces a case that has solid evidence. This is because the mismanaged resources were from Allcard’s position. On the other hand, Peter was a friend to Allcard implying that mismanagement of resources involved the two workers of the bank. According to the legal requirement of the case, Peter needs to establish a relevant method of dealing with the filed case. They should be able to account for resources and as well establish liable evidence pertaining their case (Gurusamy, 2009).
Following Waterloo’s decision of filing the case, there are some advantages and disadvantage attributed to their decision. The company will be able to focus on workers engaging in corruption activities (Gurusamy, 2009). On the other hand, it will be able to recover their mismanaged resources. Auditing done on the bank’s books of finance aids at establishing a clear method of handling and identifying the amount of mismanaged resources. On the other hand, there is transparency after auditing since the practice is independent and not influenced by the management of the bank. However, on the other hand, there are some disadvantages attributed to the case. The bank’s books of record will be given to an external audit while determining the quantity of the mismanaged resources (Gurusamy, 2009).
Waterloo case, which involves resource mismanagement done by the bank’s leaders shows how leaders engage in corruption cases while in the leadership of companies and as well banks. This case is legally applicable as it gives Waterloo a chance in recovering its mismanaged resources.
Gurusamy, S. (2009). Merchant banking and financial services. New Delhi: Tata McGraw-Hill Education.