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Banker's Liability Alert: Chargeback of Cleared Counterfeit Items |
October 10, 2009
Previously published on April 16, 2009
The Supreme Court of Canada has confirmed that a financial institution will not necessarily be liable to its customer for funds derived from the negotiation of a counterfeit cheque where those funds are voluntarily returned to the victim drawee institution. If the drawee made payment based upon a mistake of fact, believing the cheque was good, it has a legitimate entitlement to return of those funds subject to limited defences. Provided that the recipients of the funds are unable to establish a good faith "change of position" the funds can be returned to the drawee institution without court order.
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The views expressed in this document are solely the views of the author and not Martindale-Hubbell. This document is intended for informational purposes only and is not legal advice or a substitute for consultation with a licensed legal professional in a particular case or circumstance. |
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