Cheques continue to raise pertinent legal questions in terms of banking liability. The ruling handed down by the Commercial Chamber of the French Supreme Court on 5 March 2025 clarifies the scope of banks' duty of vigilance with regard to the detection of apparent anomalies on cheques. This decision deserves our attention because it clearly establishes the moment from which this obligation takes effect.
Banking due diligence: the current situation
Due diligence is one of the pillars of banking law. Based on article 1231-1 of the French Civil Code, this obligation has been clarified by a large body of case law. Its scope and intensity vary according to the transactions concerned.
In the area of payment instruments, banks are required to exercise particular vigilance. This vigilance involves checking payment instruments for apparent anomalies and detecting fraudulent transactions. Customers expect a certain level of protection.
This obligation is not uniform. It varies in intensity depending on the means of payment concerned and the stage of the transaction. Credit transfers, bank cards and cheques are not subject to exactly the same rules. In the case of cheques, the question of when the obligation to exercise due diligence is triggered remains partly unresolved. For an overall understanding of the general responsibility of the bankerSee our article on this subject.
The ruling of 5 March 2025: an important clarification
The case that gave rise to this decision is fairly straightforward. Two people entered into a contract of sale for a vehicle. The buyer paid by cheque. The seller presented a copy of the cheque to his bank on 8 September 2018 in order to verify its authenticity. The bank tells him that it has not been able to contact the bank from which the cheque was drawn and invites him to come back a few days later.
The seller finalised the sale and cashed the cheque on 11 September. On 18 September, the bank informed him that the cheque was a forgery and refused to cash it. The seller decided to sue his bank for breach of its duty of care.
After being rejected on appeal, the customer appealed to the Court of Cassation, arguing that the bank should have detected the apparent anomalies in the cheque as soon as it was initially presented as a copy, even before it was cashed.
The Court of Cassation dismissed the appeal: "the bank is only obliged to detect apparent anomalies in a cheque when it is cashed". This wording clearly sets out the starting point for the duty of vigilance.
The implications of this case law
This decision has important consequences for banks and commercial banks.
For banks, it offers clarification by strictly limiting their liability to the period after the cheque has been cashed. They are not legally obliged to detect anomalies simply by presenting the cheque in advance. It avoids imposing an obligation on banks, the fulfilment of which would be difficult to assess in the context of an informal presentation.
Another advantage for banks is that they can now refuse to give an opinion on the authenticity of a cheque before it is cashed, without risking liability. If they agreed to do so and made an error of assessment, they could be held liable.
For customers, this decision implies an increased need for vigilance in their transactions. The seller cannot rely entirely on his bank to secure a transaction before the cheque has actually been cashed. In the case under review, the seller had received a 'rough' statement of account from the customer, which he should have been wary of.
At a time when the use of cheques is declining in favour of electronic means of payment, this decision is a reminder of the inherent limitations of this means of payment in terms of immediate security.
Bank liability put to the test by other means of payment
This case law is part of an evolving landscape of the liability of payment service providers. As the judgment points out, the case law relating to cheques cannot easily be transposed to other means of payment.
Bank transfers and credit card transactions are subject to specific regimes that provide greater protection for the customer. The dematerialisation of these means of payment means that checks can be carried out automatically and instantaneously, making fraud more difficult to carry out.
A number of recent rulings illustrate this trend towards banks taking greater responsibility for electronic means of payment. The case law of the CJEU on consumer credit is moving in the direction of greater consumer protection.
This difference in treatment between cheques and other means of payment can be explained by the technical specificities of each instrument, but also by legal policy considerations. Legislators and judges seem less inclined to strengthen protection for a declining means of payment such as cheques.
The ruling of 5 March 2025 clarifies the legal regime governing cheques by clearly setting the starting point for the obligation to exercise due diligence. This solution enables banks to exercise their due diligence within a defined timeframe, while reminding users that the security of their transactions depends on their own due diligence.
If you have any questions about your bank's liability in relation to means of payment, contact our law firm, which specialises in the following areas bank liability.
Sources
- Court of Cassation, Commercial Chamber, 5 March 2025, No. 23-16.944, FS-B
- Chambéry Court of Appeal, 23 March 2023, no. 21/01786
- Article 1231-1 of the Civil Code resulting from Order no. 2016-131 of 10 February 2016 reforming the law of obligations
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