A forged check is a very significant problem. In a situation involving a forged check, the duties of every given party need be defined. This very much correlates to the issues of defenses that can be mounted against paying a check and status as a holder in due course. The reason being, if a bank accepts a check in good faith without having any knowledge of forgery, then that bank can take status as a holder in due course.
If, however, the party against whose account the forgery was drawn can sufficiently prove that the forged check or checks were, in fact, forgeries, then he or she can mount a universal defense against payment and can avoid any kind of payment on the forged checks. In such a case, the forger first and foremost will be held liable for the forged check or checks.
If a bank has reason to believe that someone is submitting a forged check for payment or deposit, that bank has a responsibility not to accept the forged check. If the bank does accept the forged check anyway, then the bank can be held liable for doing so and will likely have to repay any cost to the customer that might arise from the forged check being drawn on his or her account. However, for the most part, an instance of an easily identifiable forged check will not lead to the bank's acceptance of that check.
A check is only considered a forged check if it is signed by a party without authority to do so under another person's name with intent to commit fraud. If the check is, for example, signed with another party's name by a signer who does not have the authority to do so, but who is not intending to commit fraud, then the check would likely be considered simply invalid as opposed to being considered a forged check. The individual signing the check would still be held liable for payment, however. This is true even though that individual signed with another's name.
Generally speaking, in an instance involving forged checks, the supposed drawer of those checks is protected from payment unequivocally so long as he or she can present some evidence that those checks were forgeries. Either the drawer cannot have payment enforced against his or her account, or the drawer can sue for restitution of some kind, be it from the drawee bank or even from the forger.
Similarly, the bank, so long as it committed no wrongdoing, will likely be afforded some amount of protection. As long as the bank did not pay on the forged check, then the bank will not suffer any kind of damage. If the bank does pay on the forged check, however, the bank is held liable while the customer is not. The bank would be able to recover funds paid on a forged check by suing the forger as well.