Houston Bank receives notification of the dishonor on Monday but, because of an interruption of communication facilities, fails to notify Amy until Wednesday. What result?

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Houston Bank receives notification of the dishonor on Monday but, because of an interruption of communication facilities, fails to notify Amy until Wednesday. What result?

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Assume that Dinah draws a check on Oxford Bank, payable to the order of Pam; that Pam indorses it to Amy; that Amy deposits it to her account in Houston Bank; that Houston Bank presents it to Oxford Bank, the drawee; and that Oxford Bank dishonors it because of insufficient funds. Houston Bank receives notification of the dishonor on Monday but, because of an interruption of communication facilities, fails to notify Amy until Wednesday. What result?

Explanation & AnswerSolution by a verified expert

Explanation

Every bank has a duty to inform about the delay in payments on the part of the bank until the midnight of the next day. When Bank H receives the information about the dishonor of the check on Monday, then they should have informed Individual C until the midnight of Tuesday, but they failed to do so. So, the bank becomes liable to prove that the delay was not a violation of duty.

Verified Answer

Bank H is under an obligation to inform its customers about any delay in payment. Since, Bank H fails to comply with its duty, it will be liable towards Individual C to prove that the delay in informing Individual C was not a violation of its duty.

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