Question

Explain the applicability of the Uniform Commercial Code (UCC) to bank transactions

Assignment Overview:

In this writing assignment, you will explain a bank's liability when it deposits a customer's check in the wrong account.

Deliverables:

A 150-word (2-3 paragraph) paper

Step 1: Write a short statement informing a bank of its liability when it deposits a customer's check in the wrong account.

Three weeks ago, you deposited a $1,000 payroll check at your bank after having signed your name to the back of the check and writing the words "For Deposit Only--Account Number 7852837" immediately above your signature (Account Number 7852837 is your checking account). Since then, you have discovered that the bank did not deposit the check in your checking account, but instead deposited the check in your other account at the bank, a "money market" account. As a result, you have "bounced" three checks totaling $583, and incurred $75 in bounced check fees. Write a short letter to your bank advising them of your legal rights in this situation.

Answer 1

This is given reference under 402 and 403 of uniform commercial code

(a) Except as otehr wise provided in the article the payer bank wrongfully dishonours an item if it dishonours an item that is properly payable but the bank may dishonuor an item that would create an overdraft unless it has agreed to pay the overdraft.

(b) A payer bank is liable to the customer for damages caused by the wrongful dishonour of the cheque.

(c) The liability of the bank is limited to the actual damages incurred and proved by the customer because of wrongful dishonour by the bank and may include damages for arrest and prosecution of the custonmer or other consequential damages.

(d) Here consequential damages may depends upon facts and circumstances of each case.

(e) Therefore by applying the above provision, the bank wrongfully deposited to money market account instead of checking account and also debited the customer account with the check bouncing fees.

(f) Hence the bank is liale to the customer to repaythe damages. Daages here include cheque bounce fees debited to the bank.

(g) The following is the letter to the bank for claiming the refund

To

The Bank manager

Sub: Refund the damages

I have been a sencere account holder of the bank.

Three weeks ago, I have deposited $1000 payroll check to deposit in my account with number 7852837 and writing the words "For deposit only" on the back side of the check.

After deposting the check, it was discovered that it was wrongly deposited in the money market account. My account is debited with check bouncing charges. I kindly request you to creit the account with the cheque bouncing charges.

Here in theis case, i can sue you legally as per uniform commercial code and claim the damages.

Regards,

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