Exam 24: Banking in the Digital Age

Ken presents an instrument that states "pay to the order of Laura" to Metro Bank for payment. The most common type of negotiable instrument, this is

On Friday morning, Geoff deposits into his account at Heartland Bank a $500 check from Imelda, who also has an account at Heartland. On that same day, this check is considered

A bank must re-credit a customer's account when the bank pays a check on which the drawer's signature is forged.

Gillis writes a check to Harley as payment for a game player but soon discovers it is broken. He goes to the drawee bank and orally authorizes Ilene, a bank officer, to stop payment on the check. This order is valid for

Boris can write checks on his account at City Bank. Demi steals the checks, forges Boris's signature, and cashes the checks at City Bank. The bank is excused from any liability if, after receipt of the first forged check, Boris fails to report the forgeries within

The destruction of an original check after the creation of a substitute check prevents the check from being paid twice.

The death of a customer automatically revokes a bank's authority to accept, pay, or collect an item drawn by the customer on an account with the bank.

When processing a check, Platinum Bank encodes information, such as the amount of the check, on the item. Platinum thereby warrants to any subsequent bank or payor

Nick steals two checks from Pauline-a blank check and a check payable to the order of Retail Outlets Company, drawn on Pauline's account with State Bank. Nick forges Pauline's signature on the blank check and makes it payable to himself. Nick forges Retail Outlets's indorsement on the back of the check payable to Retail Outlets, and adds, "Pay to the order of Nick." At United Credit Union, Nick indorses the back of both checks with his own name and gives them to United for cash. United does not know about the theft or the forged signatures and presents the checks to State Bank, which pays them. Pauline, who was not negligent, discovers the forgeries and asks State Bank to recredit her account. Who suffers the loss on each check?

Finance Bank receives a check drawn on the account of Enterprise Industries, Inc., one of the bank's customers, at 3 P.M. Friday. Dora, the presenter of the check, is not one of the bank's customers. The bank uses deferred posting with a 2 P.M. cutoff hour. If it decides to dishonor the check, it must do so by midnight

Ray signs a check "pay to the order of Stella" drawn on Ray's account in Town Bank. He later orders the bank not to pay the check, but the bank pays it over his order. Subsequent checks written on the account "bounce." Most likely liable for the costs to Ray is

Ridge Bank creates a paper reproduction of customer Sophie's check with the statement "This is a legal copy of your check. You can use it in the same way you would use the original check." This is

Daisy signs a check "pay to the order of Ewan" drawn on Daisy's account in Finance Bank. Graham forges Ewan's indorsement. Finance Bank pays the check. Most likely

Debit cards represent the most common type of negotiable instrument.

With respect to processing checks for payment, the Uniform Commercial Code governs the relationships of banks with

When a bank wrongfully dishonors a check, it is liable to the customer for any resulting damages.

Misha's debit card, issued by National United Bank, is stolen and used without her permission. She tells the bank within thirty days. She may be required to pay no more than

Gary writes a check drawn on Hill Bank for $400 "payable to Ian" on May 1. Gary dies on May 3. Ian presents the check to the bank on May 5. Unaware of Gary's death, the bank

On an automated teller machine (ATM) belonging to USA Bank, Sven placed a card-skimming device to pull information from the magnetic strips of users' debit cards. The device then transmitted the stolen data to thieves who used it to gain access to, and empty, the bank accounts of the users, including Megan. Megan learned of the theft the next day and promptly notified USA. Is Megan entitled to a recredit of her account for the most of the loss due to the theft? Explain.

Mara has a checking account with North Bank. Mara signs a check "payable to Ovid" drawn on Mara's account. North Bank is