ABSTRACT
In recent years, the Quincecare duty – the duty of banks to protect their customers from fraud—has been the bane of banks. So a pair of decisions last year, one from the United Kingdom Supreme Court and the other from the Hong Kong Court of Final Appeal, repudiating Quincecare’s reasoning and recasting the duty, ought to be welcome news to banks, right? Wrong. This article explains that paradoxical outcome. And in doing so, it casts doubt on the reasoning proffered in those cases; their attempt to assimilate banks’ fraud prevention role into the ‘ordinary’ principles of agency is questioned.
Ultimately, given that both the old Quincecare and the new are troublesome, as a matter of both doctrine and policy, New Zealand law should adopt neither. Because of the moral hazard problem, Quincecare, new or old, asks banks to do too much, likely to the detriment of most. But if New Zealand law does seek such a role for banks, this article suggests that it is the old Quincecare that is preferable, as the new one might just be too smart for its own good.
Zhu, Qinhao, Quincecare is Dead, Long Live Quincecare! (June 9, 2024), CSLB, Forthcoming.
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