The bank’s liability for damages resulting from the execution of unauthorized payment transactions

Momčilov, Milena (2024) The bank’s liability for damages resulting from the execution of unauthorized payment transactions. In: Causation of damage, damage compensation and insurance : Proceedings from XXVII international scientific conference. Institute of Comparative Law, Belgrade; Valjevo, pp. 235-253. ISBN 978-86-82582-21-2

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Abstract

The way in which liability for damages is classified significantly determines the positions of both the wrongdoer and the injured party. This is because the rules governing contractual and tort liability differ substantially and can lead to different consequences. The subject of this paper concerns the attempt to classify the bank’s liability for damages caused by the execution of unauthorized payment transactions. Recognizing the complexity and insufficient exploration of this topic, the author believes that an analysis of the legal nature of the bank’s liability for damages could be of considerable practical importance. During the analysis of the issue, a distinction is made between cases where the bank caused harm to its client by unauthorized debiting of the client’s payment account and cases where the harm was caused by unauthorized debiting of a non-payment account. It seems that these two situations should be treated differently concerning the classification of the nature of the bank’s liability for damages. Accordingly, the paper analyzes both situations in isolation, presenting arguments in support of the suggested classification of the bank’s liability, all with the aim of providing the most adequate answer to the question posed and with the intention of protecting the bank’s client as the economically weaker contracting party.

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