The liability of Banks in electronic fund transfer transactions(A case study of Zambian Banks)

Abstract

The ability of banks in electronic fund transfer (EFT) transactions is discussed in this directed research under the Zambian Laws which includes the national payment systems Act No. 1 of 2007. The research doesn't covers banks' liability in electronic credit and debit transfers. It covers banks' liability in Electronic Fund Transfer at the Point Of Sale (EFTPOS), Automatic Teller Machines (ATM) and office banking. Liability of banks in credit card transactions and cheque transactions falls outside the scope of this research. In the absence of Zambian legislation in this area, an analogy is made with the traditional methods of payment. An attempt is also made to extract the applicable rules from the general principles of law and the banking practice in Zambia. The thesis starts by analyzing the legal nature of payment orders in chapter two particular, whether a payment order is a negotiable instrument, a creation of trust funds, or merely a mandate from a customer to his bank. Secondly in chapter three there is an analysis of banks' liability for failure to make an EFT transaction. This encompasses banks' liability for complete failure to effect an EFT transaction and for improper implementation of such a transaction. Thirdly in Chapter four an analysis of the right to stop payment, completion of payment, irrevocability and banks' liability for failure to stop payment is made. There is also an analysis of the banks' liability for erroneous EFT transactions. This includes allocation of losses resulting from errors in payment orders and errors committed by banks during the execution process of such orders. There is also a review and detailed analysis of banks' liability for unauthorized EFT transactions. Issues such as authentication of payment orders, security measures adopted by banks and allocation of losses resulting from unauthorized transactions are analyzed. The research will also look

at the recoverability of damages for banks' failure to implement customers' instructions properly. It will discuss what measures of damages are applicable in certain situations such as banks' complete failure to make an EFT transaction, failure to transfer funds on time etc. The research is completed by a summary, conclusion and recommendations in chapter five. The recommendations will focus more on the effectiveness of the Zambian law in electronic funds transfer transactions.