Three years after the secretary’s last fraudulent withdrawal, she confessed to Tally who promptly notified the bank of the issue. Can Tally recover the funds from American Security Bank? Explain.
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Tally held a savings account with American Security Bank. On seven occasions, Tally’s personal secretary, who received his bank statements and had custody of his passbook, forged Tally’s name on withdrawal slips that she then presented to the bank. The secretary obtained $52,825 in this manner. Three years after the secretary’s last fraudulent withdrawal, she confessed to Tally who promptly notified the bank of the issue. Can Tally recover the funds from American Security Bank? Explain. |
Explanation
The relationship between the bank and the customer gives certain rights and duties to both parties. The bank has the duty to send a monthly statement to its customers and the customers have the duty to examine it and notify bank in case of any suspicious transactions within prescribed time limit of 30 days.
In this case, Person T has not examined the statement and passbook entries within the prescribed time limit. Person T informed the bank after three years of the forgery by the secretary. So, in this case, the negligence by the customer relieves the bank from compensating. If Person T had informed bank earlier, Person T may have had the right to recover the amount.
Verified Answer
In this case, Person T may not manage to attain the funds from Bank A since Person T has not examined the statement sent to them by the bank within prescribed time limit.
