Consumer Banking and Payments Law: 3.7.2.2.2 Consequences if drawer’s signature is missing or forged
In the case of any forgery of the drawer’s signature, the drawee bank must re-credit the account and cannot assert subrogation rights against the drawer whose name was forged.303 Rather, the drawee is stuck with the loss from the improper payment on a forged drawer’s signature, unless a prior party (not including the drawer) breaches a presentment warranty by having “knowledge that the signature of the purported drawer of the draft is unauthorized.”304 However, a forged or unauthorized signature