Clemente Brothers Contracting Corp. v. Hafner-Milazzo
Court of Appeals of New York
14 N.E.3d 367 (2014)
Clemente Brothers (plaintiff), a large and financially sophisticated company, agreed with Capital One (defendant) to shorten the UCC's default one-year window for reporting forged-check irregularities down to 14 days, and passed a corporate resolution acknowledging that requirement. When Clemente Brothers's own secretary, Hafner-Milazzo (defendant), was later found to have forged checks to embezzle funds, Capital One moved for summary judgment on the ground that Clemente Brothers hadn't reported the fraud within the agreed 14-day window; the trial and appellate courts agreed, and Clemente Brothers appealed.
Whether a customer and its bank can modify by agreement the one-year period within which the customer must report irregularities before seeking recovery for a wrongfully paid item, if the modification is not manifestly unreasonable.