Abstract:
Banks in Singapore typically exclude liability for payments of forged cheques drawn on a customer’s account. The exclusion is contrary to the common law, which allocates the risk of forgery to the bank. It is argued here that such exclusions are unreasonable in the light of the customer’s other duties and liabilities under the banking contract. However, having regard to the modern banking environment, it may be reasonable to impose other defined duties on the customer, beyond those recognised by the common law. Whether a customer should be saddled with the loss after a breach of those duties is a more difficult question and insurance should be explored for an equitable solution.