Yes, your bank may offset the customer's account for the $4,000 amount, pursuant to both common law and your contractual right of setoff (based on your description of the customer's account agreement). In cases where funds are held in the account in trust for an innocent third party, the question of the right to setoff becomes more complicated, but your question does not suggest that such facts apply in this case.

For resources related to our guidance, please see below:

• Fisher v. State Bank of Annawan, 163 Ill.2d 177, 181 (1994) (the right to a setoff may be derived either from a contract or the common law right of setoff)

• Pope v. First of Am., N.A., 699 N.E.2d 178, 180 (3rd Dist. 1998) (court held that bank could exercise its contractual right to setoff for customer’s unauthorized withdrawals from another customer’s account)

• Selby v. DuQuoin State Bank, 223 Ill.App.3d 105, 109 (5th Dist. 1991) (applying the right of setoff to a jointly held account)