Question

In December 1999, Mover of America, Inc., hired Jasmine Talbot as a bookkeeper. Talbot was responsible for maintaining the company checkbook and reconciling it with the monthly statements from Unitrust Bank. She also handled invoices from vendors. Mover's president, Dev Rishi, reviewed the invoices and signed the checks to pay them, but no other employee checked Talbot's work. By the end of her first full month of employment, Talbot had forged six checks totaling more than$22,000, all payable to Triple M Entertainment, which was not a Mover vendor. By October 2000, Talbot had forged fifty-nine more checks, totaling more than$475,000. A Unitrust employee became suspicious of an item that required sight inspection under the bank's fraud detection standards, which exceeded those of other banks in the area. Talbot was arrested. Mover filed a suit in a Georgia state court against Unitrust. The bank filed a motion for summary judgment. On what basis could the bank avoid liability?

Answer 1

The bank could potentially avoid liability based on contributory negligence.

Step-by-step explanation:

The bank could potentially avoid liability on the basis of contributory negligence. Contributory negligence refers to a situation where the plaintiff's own negligence contributed to the harm or loss they suffered. In this case, Mover of America, Inc. did not have any other employees checking Jasmine Talbot's work, which could be considered negligent. Therefore, the bank could argue that Mover's negligence in failing to have proper checks and balances in place contributed to the forgery.

Answer 2

Unitrust Bank could avoid liability by demonstrating adherence to ordinary care under industry standards according to the UCC, especially since they exceeded these standards in fraud detection. Mover of America's insufficient oversight may place responsibility on them, as their internal controls failed to catch the forgeries.

Step-by-step explanation:

Unitrust Bank could potentially avoid liability on the basis of the Uniform Commercial Code (UCC), which implies that a bank must exercise ordinary care in the transaction of business. If Unitrust Bank adhered to the standards of the industry, or in this case, exceeded them through their fraud detection measures, they can argue they are not liable for the forgeries. Moreover, Mover of America, Inc. may have failed to demonstrate due diligence in overseeing its employees, particularly given that no other employee checked Talbot's work and the president only reviewed invoices but not the actual checkbook entries.

Mover of America's lax internal controls could weaken their case against the bank. The bank, performing within the industry standards and proactively detecting fraud, places them in a position where they can claim to have met their duty of care. The responsibility could be shifted onto Mover of America, Inc. for not catching the forgeries themselves, especially considering that the president did sign off on the checks without thorough verification.