In Circumstances Where a Bank Has Been Left with Liability

question 47

Multiple Choice

In circumstances where a bank has been left with liability for a forged cheque,why should every party accepting that cheque have verified the authenticity of the endorsements on it?

• A) The bank will deduct the value of the worthless cheque from any endorser's account.
• B) A verification agreement will entitle the bank to recover assets of endorsers.
• C) Without a special endorsement,collection may be a problem.
• D) All prior endorsers risk the bank's recovery efforts.

---

Definitions:

Liability Policy

An insurance policy providing coverage against legal and financial responsibilities incurred as a result of causing injury to others or damaging property.

Professional Liability Policy

A type of insurance that provides coverage to professionals and firms against claims made by clients for negligence or other mistakes.

Tortious Conduct

Refers to behavior or actions that are unlawful under tort law, leading to liability for damages to a person or property.

Negligent Professional Conduct

The failure of a professional to act with the competence and care that is expected of those within their profession, resulting in harm or damage.