Cengage Advantage Books: Law for Business 18th Edition by John Ashcroft ,Janet Ashcroft

Exercise 23

Two related businesses, Grassi Design Group Inc. (Grassi) and Beauchemin Grassi Interiors Inc. (Beauchemin), had checking accounts with Bank of America, N.A. and RBS Citizens, N.A. An employee common to both corporations forged and cashed numerous checks that the banks honored. Both banks had used fraud-detection computer software to identify possibly fraudulent checks, but the companies had failed to examine the monthly statements sent by the banks, so no fraudulent checks were reported within thirty days of appearing on a statement. Grassi and Beauchemin sued the banks. Were the banks liable? [Grassi Design Group Inc. v. Bank of America, N.A., 908 N.E.2d 393 (Mass. App. Ct.)]