DAVID KRONEMYER: I (formerly) was knowledgeable about various issues involving the Uniform Commercial Code (“UCC”). I wrote the following paper – now long out-of-print – on various issues arising under Article 3 and Article 4. I post it for your delectation. You can download it as a .pdf.
Here is an abstract. In spite of the remedies available in the UCC, in 1978, the California Supreme Curt created a new depositary tort, by extending to a drawer a cause of action for negligence against a collecting bank, as a result of circumstances surrounding the negotiation of a check. I analyze this revolutionary change in the legal relationships between collecting banks and the victims of fraudulent schemes involving checks; examine its effect on subsequent litigation; and presciently foretell its implications for banking law and prudent banking practices.