Topic: Uniform Commercial Code
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Do we need to record a new filing statement every time a debtor obtains new collateral if we already have a blanket filing statement?
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We believe that executing new security agreements and filing statements every time a debtor acquires new property (“after-acquired property”) is overkill. However, you must ensure that your security agreements and filing statements are structured to properly include collateral that the debtor acquires after the execution of the security agreement and the filing of the financing…
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Can we charge a fee to any non-customer who presents a check for cashing, particularly when the check is drawn on an account at our bank (for example, a payroll check for a business customer)?
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We are not aware of any limitations on check cashing fees in Illinois law. We do recommend that you review your account agreements to see if the fee is disclosed; this will ensure that you do not run into problems with non-accountholders who refuse to pay the check cashing fee when the check was written…
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Are Illinois banks required to list the recipients of checks on deposit account statements?
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If a deposit agreement does not require a bank to identify check payees or to include copies of checks in periodic account statements, then the bank is not required to do so. The Uniform Commercial Code provides a safe harbor for banks’ liability for forged and altered checks if their account statements include information that…
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Does Illinois have a statute of limitation for enforcing certificates of deposit?
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Illinois has retained the UCC limitations period. UCC Section 3-118, subsection (e), states: An action to enforce the obligation of a party to a certificate of deposit to pay the instrument must be commenced within 6 years after demand for payment is made to the maker, but if the instrument states a due date and the…
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Would a blanket filing statement covering “all equipment” include titled vehicles?
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We do not believe that your security interest in the debtor’s vehicles could be perfected by a UCC blanket financing statement. The general rule is that you must perfect a security interest with a financing statement (which can cover “all assets” or “all personal property” 810 ILCS 5/9-504(2)). 810 ILCS 5/9-310(a). However, a special rule…
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Do we have any defenses if a customer reports forgeries that are over a year old?
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The general rule as to forged checks is that the customer is not liable. 810 ILCS 5/3-401, 3-403
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Has there ever been any prohibition against charging business customers (or customers in general) returned check fees?
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In Illinois, the answer is yes as to commercial accounts. The UCC caps returned check fees on commercial accounts at $4.50. 810 ILCS 5/3-806. As to consumer accounts, that rule does not apply. Instead, the general rule from the Banking Act applies, which is that banks may charge any fees “subject only to the provisions…
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If an employee forges a check with the name of the authorized signer, would the bank be liable?
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The general rule as to forged checks is that the customer is not liable. 810 ILCS 5/3-401, 3-403
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What rules apply when a business customer seeks restitution from a bank after an employee of the customer stole money from the customer’s deposit account? In this case, an employee forged checks that were made out to “CASH.”
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Employees who make checks out to “CASH” present a special problem that has been addressed in several Illinois cases. These cases have held that banks are potentially liable for failing to detect forgeries when employees cash out checks drawn on his or her employer’s account that are made out to “CASH.” See, e.g., Mutual Service…