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Simple English definitions for legal terms
bank-statement rule
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A quick definition of bank-statement rule:
Bank-Statement Rule: If you have a bank account, your bank will send you a statement every month that shows all the money going in and out of your account. It's important to check this statement and make sure everything looks right. If you see something that you didn't do, like someone taking money out of your account without your permission, you need to tell the bank right away. If you don't report it within a reasonable time, the bank might not be able to help you.
A more thorough explanation:
The bank-statement rule is a principle in commercial law that states that if a customer of a bank fails to review their bank statement and any accompanying items, and does not report any unauthorized payments due to forgery or alteration within a reasonable time, they may not be able to complain about it later.
For example, if a customer receives their bank statement and notices that there is a charge for a purchase they did not make, they should report it to the bank as soon as possible. If they wait too long and do not report it within a reasonable time, they may not be able to dispute the charge later.
Another example is if a customer receives a check that has been altered, such as the amount or payee name. If they do not report the alteration to the bank within a reasonable time, they may not be able to dispute it later.
The bank-statement rule is in place to encourage customers to review their bank statements and report any discrepancies in a timely manner to prevent fraud and unauthorized transactions.