The Liability of banks in electronic fund transfer transaction
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The liability of banks in electronic fund transfer (EFT) transactions is discussed in this thesis under the British and the United States law. The thesis covers banks’ liability in electronic credit and debit transfers. It covers banks’ liability in Electronic Fund Transfer at the Point Of Sale (EFTPOS), Automatic Teller Machines (ATM) and home and office banking. Liability of banks in credit card transactions and cheque truncation falls outside the scope of this thesis. In the absence of British legislation in this area, an analogy is made with the traditional methods of payment. An attempt is also made to extract the applicable rules from the general principles of law and the banking practice. The discussion, under the United States law, relies on analysing the Electronic Fund Transfer Act of 1978 and Article 4A of the Uniform Commercial Code, which concern banks’ liability in consumer and commercially based EFT transactions. The thesis starts by analysing the legal nature of payment orders. In particular, whether a payment order is a negotiable instrument, a creation of trust funds, an assignation or merely a mandate from a customer to his bank. Chapter two discusses banks’ liability for failure to make an EFT transaction. This encompasses banks’ liability for complete failure to effect an EFT transaction and for improper implementation of such a transaction. Chapter three discusses the right to stop payment, completion of payment, irrevocability and banks’ liability for failure to stop payment. Chapter four discusses banks’ liability for erroneous EFT transactions. This includes allocation of losses resulting from errors in payment orders and errors committed by banks during the execution process of such orders. Chapter five discusses banks’ liability for unauthorised EFT transactions. Issues such as authentication of payment orders, security measures adopted by banks and allocation of losses resulting from unauthorised transactions are discussed in this chapter. Chapter six discusses the recoverability of damages for banks’ failure to implement customers’ instructions properly. It discusses what measures of damages are applicable in certain situations such as banks’ complete failure to make an EFT transaction, failure to transfer funds on time etc. The thesis is completed by summary and conclusion.