The Arguments at Trial
Zuzzane’s attorneys argued that a bank has no right to dishonor a check except for the normal reasons permitted by law, such as a suspected forgery, an improper endorsement, and so forth. They further argued that the bank, based on its relationship with Zuzzane, should have contacted her before dishonoring the check so that she could have taken other action to prevent her loss of the land and that she did not have an automatic deduction from her personal account for the business loan. The bank’s attorneys argued that Zuzzane’s being overdue on her last loan payment indicated she was in financial trouble, that they had a right to seize her account to cover the overdue payment, and that instead they simply refused to honor checks on her account until the overdue loan was paid. They further argued that based on banking industry customs, it is the responsibility of the customer and not the bank to make sure there are sufficient funds to cover checks written. They were losing money each day that the loan was unpaid.
Questions to Discuss
Whom do you think the jury will favor, Zuzzane or the bank? Why?
If you feel Zuzzane should win, what will her damages be? If you feel the bank should win, what will their damages be?
Under what circumstances, if any, should a bank be able to offset a loan to a customer against any bank account on which the customer’s name appears?
Sample Solution
