We do not believe that your institution will be liable for any forged checks that were not reported within the 30 days specified in your account agreement. Under the Uniform Commercial Code (UCC), a customer will be liable for any forged checks that are not reported with “reasonable promptness” (provided that the bank acted in good faith and exercised “ordinary care”). 810 ILCS 5/4-406(c), (e). Financial institutions may narrow the definition of “reasonable promptness” in account agreements, and an Illinois court has held that a 30-day notification window is permissible. 810 ILCS 5/4-103(a)Napleton v. Great Lakes Bank, N.A., 408 Ill.App.3d 448, 452 (1st Dist. 2011).
A deposit customer recently notified us of a large amount of forged checks paid over the past several months. Our account agreement requires the customer to notify the bank of any forgeries within 30 days. Are we liable for the forged checks?
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