Author Question: The term blue sky laws is attributed to a court opinion describing the purpose of state securities ... (Read 81 times)

mia · **on:** Jun 24, 2018

The term blue sky laws is attributed to a court opinion describing the purpose of state securities laws as working to prevent the speculative schemes which would have no more basis than so many feet of blue sky.
a. True
b. False
Indicate whether the statement is true or false

Question 2

Unauthorized Fund Transfers. Lawrence Kruser and his wife maintained a joint checking account with the Bank of America. The bank issued to each of them a Versatel card and separate personal identification numbers so that they could access funds in their account from automated teller machines (ATMs). The Krusers believed that Mr. Kruser's card had been destroyed in September 1986. The December 1986 account statement mailed to the Krusers by the bank, however, reflected a 20 withdrawal of funds by someone using Mr. Kruser's card at an ATM. Mrs. Kruser underwent surgery in December 1986 and was in the hospital for eleven days. She spent the following months recuperating from the surgery. She therefore failed to examine the December bank statement promptly and did not discover the unauthorized December withdrawal until August or September of 1987, at which time she reported it to the bank. In September 1987, the Krusers received bank statements for July and August of 1987, which reflected forty-seven unauthorized withdrawals, totaling 9,020, made from an ATM by someone using Mr. Kruser's card. They notified the bank of these withdrawals within a few days of receiving the statements. Is the bank liable to the Krusers for the unauthorized with-drawals? Discuss.

jjorrostieta · **Reply #1 on:** Jun 24, 2018

Answer to Question 1

TRUE

Answer to Question 2

Unauthorized fund transfers
The court held that the customers' failure to notify the bank of the unauthorized electronic transfer of 20, using a bank card that the customers had assumed was destroyed, relieved the bank of liability for unauthorized transfers totaling 9,020 approximately seven months later. According to the testimony of Yvonne Maloon, one of the bank's managers, the bank would have canceled Kruser's card if it had been timely notified of the December unauthorized transfer, and the card could not have been used to accomplish the unauthorized transactions in July and August. Among other arguments, the Krusers contended that the December withdrawal was so isolated in time and minimal in amount that it could not be considered in connection with the July and August withdrawals. They asserted that to hold otherwise would be inconsistent with the primary objective of the EFTAto protect the consumer. The court believed, however, that the result appellants fear is avoided by the requirement that the bank establish the subsequent unauthorized transfers could have been prevented had the con-sumer notified the bank of the first unauthorized transfer.