COMPARATIVE
NEGLIGENCE
AND DUE
DILIGENCE
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A GENERAL OVERVIEW...
Prior to the 1990 UCC
(Uniform Commercial Code) revisions, a single party --
frequently the bank -- was held responsible for losses
when both the bank and the customer were negligent in
check fraud cases. Since 1990, however, liability for
fraudulent checks can be shared by both the bank and the
check customer.
This principle is called COMPARATIVE
NEGLIGENCE.
Under this doctrine,
when both the bank and the customer are negligent, the
1990 UCC provides guidelines for allocating losses
between both parties according to their respective levels
of fault, rather than imposing the entire loss upon
either the bank or the customer. Although each case is
different, the bottom line for check issuers is that if
their documents are forged or altered, they can be found
liable for some of the financial losses incurred.
How InFlowTech Can Help -
This makes it important
for companies to exercise DUE DILIGENCE
to protect their documents. Not only will security
features such as INFLOWTECH® Ghosting Techniques,
Customer and Artificial Watermarks, Prismatic Printing,
Micro Font and Safety Papers reduce the odds of
check fraud, they also lessen the issuer's risk under COMPARATIVE
NEGLIGENCE.
By exercising DUE
DILIGENCE, the issuer gains peace of mind
while reducing risk of financial loss.
Lastly, banks are no
longer responsible for signature verification on every
which that they accept. This, in turn, places a greater
burden on corporations to protect against incidences of
check fraud.
UCC Comparative Negligence and Due Digligence
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This information is
provided as a public courtesy in the hope of generating
interest on your part to consider the subject of
COMPARATIVE NEGLIGENCE AND DUE DILIGENCE.
We encourage you to
discuss this subject with your legal counsel, bankers,
auditors and internal security personnel.
We hope to be of service
to your company, if our check safety products, document
design services and usage systems ENHANCE the Quality and
Security of your operations.
Thank
you.
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