If one or more checks are lost, you are always well advised to immediately report it to your bank. Because it's lost doesn't mean it will be forged. However, if it is forged, it will be presented to the bank for payment from your account. If the bank pays it, and it is not your signature, the bank is legally responsible for the payment under the United States Consumer Code, or the UCC, so long as none of the exceptions are present. If any of the listed exceptions are present, the onus may fall on you, not the bank. In either case, the forger is legally responsible for the payment, but in the absence of receiving it, the UCC determines who is responsible.
It is a common legal tenant that the negligence of one party should not incur responsibilities or losses of another part. When you open a checking account, you are entering into a contract. The contract specifies that the bank will hold your money in deposit and pay it out to people to whom you write checks. The bank does not by contract or law take the responsibility for forgeries. If a lost or stolen check is the result of negligence or the lack of "ordinary care," it may shift the responsibility off the bank. For example, if you leave your check on a park bench, it is not considered ordinary care. It invites theft and forgery and creates an undo risk for the bank.
Reasonable Commercial Standards
The benchmark used in the UCC for ordinary care is "reasonable commercial standards." That is a subjective term. But its subjectivity allows for courts to consider special circumstances specific to many types of people, professions and businesses. For example, what is a reasonable commercial standard of ordinary care for someone who works in an office may be different than someone who drives a cab. Standards for businesses might be different than standards for individuals. The benchmark is "reasonable." A court, should it result in a legal dispute, will want to see that care was taken to avoid the theft of checks.
Timely Balancing of Your Checkbook
When checks are lost or stolen, it's not necessarily just one check. It might be an entire book of checks or more. Once one check has been forged, it's reasonable to think that if the forger of the first check has more checks, he will forge them as well. Because the owner of the checking account is the person in the best position to determine from bank statements that forgeries are occurring, the law essentially requires him to identify the problem or take responsibility for the resulting losses. In other words, if you don't balance your checking account when your statement arrives and it results in continued forgeries that would have otherwise been prevented, it will probably shift the onus for additional losses to you.
Sometimes, in a legal dispute, the court will decide that each party--the bank and the account holder--are partially to blame. This may happen if the bank as well as the account holder don't exhibit ordinary care. The court can find that each party contributed to the loss to the extent that each party failed in their obligation of ordinary care. So, in the case of an account holder not examining his statement quickly, for example, a portion of responsibility may go to the bank and a portion to the account holder.
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