In situations where the bank fails to detect forged signatures and the customer does not immediately notice that the forged cheques have been cashed from its account,the courts will look to the bank-customer agreement to determine liability.If there is none,the common law rules apply.

Question

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In the absence of a specific bank-customer agreement covering such situations, common law principles, including those related to negligence and the duty of care owed by banks to their customers, will be applied to determine liability.

In Situations Where the Bank Fails to Detect Forged Signatures