Can a Bank Charge an Overdraft against a Partnership?
An overdraft must, in general, be charged against the account of the depositor who wrote the overdraft check. However, problems have arisen with respect to overdrafts affecting a partnership and an individual partner. It has been held that a bank cannot charge an overdraft of a partnership against the individual account of a member, although the member, as such, may be liable for the overdraft. Service Charge on Overdraft Checks According to most state and federal law, banks are permitted to charge service charges on overdraft checks as long as the charge is ¿reasonable¿. Reasonableness is determined by similar service charge rates in the banking industry at the time of the overdraft. What is Check-Kiting and What Do Banks Do about It? Banks sometimes fall victim to the form of fraud known as check-kiting. A check kite is a method of fraud in which the wrongdoer creates a continuous interchange of worthless checks between at least two accounts at separate banks and involves covering ov
