Forged cheques again

In a previous posting in April 2009, I raised the issue of cheques with forged signatures. Banks are under common law liable for the value of such cheques as they are not allowed to pay out under the cheques except if the actual signature of the customer is present. However, the banks use contractual clauses to shift the risk of forged cheques onto the customer.

Mr Michael Hwang, Senior Counsel, and President of the Law Society, has now raised the issue of whether the banks should do so. He has raised the issue with the Association of Banks, the Consumers' Association of Singapoe and with a Cabinet Minister. However, nothing has made banks change their minds about the use of such clauses. He mentions that in Malaysia and in Hong Kong, customers will not stand for the use of such clauses. Hopefully, the business community acting through trade associations and the like will exert some pressure on the banks to change.

In the meantime, for us individuals, there is always the issue of whether we can rely on provisions of the Unfair Contract Terms Act to try to argue that the banks' clauses are invalid.