Exam 25: Checks, the Banking System, and E-Money

When a check is presented for payment after certification at the certifying bank,and the check has been altered to reflect a higher amount,the bank must pay:

Notifying a bank within 2 days of discovering a lost debit card limits liability to $50.

When the amount of a check has been raised to a higher amount than it was originally for,the drawer is generally liable only for the original amount of the check.

When a check is certified,which of the following occurs?

Richard has a checking account at the Fourth National Bank.He receives his monthly statement on the fifteenth of every month.On March 15 he receives his statement for the previous month.Because he is busy,he glances at it and then sets it aside.Two weeks later he examines it more carefully and discovers a forged check in the amount of $500 that the bank has paid.What should Richard do? Who has responsibility for the forged check?

Which of the following is true?

The legal effect of a stale check is which of the following?

In January of 2001,Fred had a cocktail party for his coworkers.The next day,after cleaning up,Fred noticed that a check had been stolen from his checkbook.Fred immediately called his bank and issued a stop-payment order on the check.One week later,the check was received by the bank and the bank paid it.Fred's signature was forged on the check.Fred never followed his oral stop-payment order with a written stop payment order.Because Fred was notoriously sloppy with his personal financial affairs,Fred did not notice that the bank had paid the check until he was preparing his income tax return in April of 2002.Can Fred recover from the bank?

Who can certify a check?

A check that has been outstanding for more than 1 month is considered stale.

If the drawee's bank certifies a check,the drawer is discharged from liability on the check.

Jenny has a checking account at Intrastate Bank.Jenny loses her checkbook.Richard finds it and forges a check payable to himself.He then indorses it,and properly negotiates it to Yummy Treats Restaurant.Yummy Treats cashes the check at Intrastate.Jenny learns of the forgery and complains to Intrastate.What are the liabilities of each of the parties involved?

Bubba,a good old country boy who has moved to the big city,had never locked the doors at his house in the country.Now that he has moved to the big city,he still often forgets to lock his doors.On one of these days,someone came into his home and stole,among other items,his checkbook and debit card.Bubba only writes a few checks a month,so he did not know until 2 weeks later that the checkbook and debit card were missing.Bubba had partially filled out a check,which he had planned to use to make final payment to a carpenter who was to do some work the following week in Bubba's condominium.Bubba had signed the check and filled in the carpenter's name,but had not filled in the amount because he did not know the carpenter's charges.It turns out that the thief was this carpenter who had noticed that Bubba did not keep his door locked when he went to Bubba's to estimate the job.The thief filled out the amount on the signed check as $1,500.In addition to the incomplete check made to him,the thief forged three other checks and deposited them.Lastly,when Bubba and the carpenter agreed on the work,Bubba wrote a $200 check to the carpenter that had not been paid when Bubba discovered the thefts.Bubba placed a valid stop-payment order with his bank,but the bank paid this check anyway 5 days later.All of the other checks were also paid by Bubba's bank.In addition,the thief used the debit card in a $3,000 transaction.Discuss the liabilities of the parties.

With a certified check,the certification expires when the check becomes stale.

The person to whom the check is indorsed is the indorsee.

A banking day is any day that the particular bank is open and offering any of its services to the public.

What steps must a drawer take in order to make a bank liable for paying a postdated check?

In connection with a checking account at a bank,what is an overdraft?

The Electronic Fund Transfer Act regulates consumer electronic funds transfers.

Which of the following is a characteristic of bank checks that makes payees often more willing to accept a bank check than to accept a personal check?