The company sued the Bank for negligence, arguing that the Bank failed to exercise ordinary care when it released cash to the bookkeeper without the signature of any person listed on the signature card. Section 674.103(1), Fla. Stat. (2002) provides that a customer cannot assert a claim against a bank if the customer fails to report an unauthorized signature or alteration within one year of the statement being sent to the customer. The trial court found that the Bank= s release of funds to the bookkeeper constituted a failure to exercise ordinary care. Therefore, the trial court held that the deposit agreement was void.

The Florida appellate court disagreed and reversed the trial court= s decision. A The agreement between the parties does not disclaim the bank= s responsibility to exercise ordinary care and it does not limit the bank= s damage for its failure to exercise such care,@ the court wrote. A Accordingly, the Deposit Agreement is not in violation of section 674.103(1), and it is a valid agreement.@ The appellate court concluded that by reducing the time period in which the company was required to notify the bank of any problems from one year to sixty days did not absolve the bank of its duty to exercise ordinary care. It only provided a condition which the company had to comply with before seeking reimbursement.

This decision should be a wake up call to all associations who employ a A relaxed@ bookkeeping style. An association must report any problems or unauthorized transactions to its bank within the time period set forth in the agreement between the bank and the association. Therefore, it is imperative to balance accounts regularly and pay special attention for signs of possible fraud. Report any evidence of fraud to your bank immediately!

CONTACTS: WHEN DOES PRESSURE TO SIGN BECOME ILLEGAL DURESS?

Have you ever entered into an agreement and then had second thoughts? Maybe you found a better deal. Maybe you just changed your mind. Sometimes you may have felt pressured to sign a contract, but is the situation so drastic as to amount to duress?

In a recent decision, a Florida appellate court addressed the concept of duress concerning the purchase of a condominium unit. In Woodruff v. TRG-Harbour House, Ltd., 32 Fla. L. Weekly D2169 (Fla. 3^rd DCA, September 12, 2007), a tenant exercised her right to purchase the rental unit in which she lived. Despite a provision in the purchase agreement prohibiting assignment of the purchase contract, the tenant assigned her contract rights to a third party buyer. The third party buyer paid the deposit. Once the owner of the condominium unit got wind of the assignment, an attorney for the unit owner visited with the tenant and convinced the tenant to sign a letter terminating the purchase agreement.

The third party buyer sued the tenant for breach of contract. The tenant turned around and sued the unit owner to complete the sale. The tenant claimed the attorney used his superior position to get her to cancel the purchase agreement. The tenant alleged that the attorney advised her she committed an illegal act and even possibly a criminal act; thus, she signed the termination agreement under duress. The trial court dismissed the tenant= s claim against the unit owner.

The Florida appellate court affirmed the decision of the trial court. The appellate court explained that to state a cause of action for duress, a plaintiff must demonstrate that (1) one side involuntarily accepted the terms of another; (2) circumstances permitted no other alternative; and (3) the circumstances were the result of coercive acts of the opposite party. The appellate court stated that the attorney= s action did not indicate the tenant had no alternative but to sign the termination letter; thus, the tenant failed to show she signed the termination letter involuntarily and as a result of coercive acts.

8 2007 by Gelfand & Arpe, P.A.