Exam 31: Checks and Funds Transfers

Most states provide that if a dishonored check is not made good within a stated period of time, it will be presumed that the check was originally issued with the intent to defraud.

A bank will not be liable for payment of a check on which the drawer's signature has been forged if:

The standard form of check does not specify when it is payable, and it is therefore automatically payable on demand.

A depositor issued a check and, after mailing the check, suffered a heart attack and died. In the regular course of business, the bank paid the check when presented for payment, despite the fact that the bank had received notice fourteen (14) days earlier of the depositor's death. In terms of the bank's payment of the check

Funds transfers made by businesses are governed by __________ regulations.

A bank must be given a reasonable amount of time to put a stop payment order into effect.

Consumers have the responsibility to examine periodic statements provided by their financial institutions; accordingly, if a loss would not have occurred but for the failure of a consumer to report within __________ of the transmittal of the statement any unauthorized transfer, the loss is borne by the consumer.

If a bank pays a check whose face has been altered to increase the amount above that which the drawer intended to pay, the bank:

A buyer may stop payment on a certified check issued to a seller if the goods are defective when received.

A consumer who notifies the issuer of an EFT card within two (2) days after learning of a loss or theft of the card is limited to a maximum liability of:

The delivery of a check is regarded as an assignment of money on deposit, and the drawee bank is required to pay the holder the amount of the check.

If oral, a stop payment order is binding on the bank for __________ days unless confirmed in writing within that time.

Ordinarily, the drawee bank is liable to the drawer when it pays a check on which the drawer's signature has been forged.

A depositor's unauthorized signature must be reported to the bank within three years of the time that the bank statement is received.

Certification of a check at the request of a holder:

To be effective, checks must be executed on forms that are printed expressly for that purpose and issued by a bank or other financial institution.

A bank's customer whose signature has been forged may be barred from holding the bank liable if the customer's negligence substantially contributed to the making of the forgery.

A thief stole Art's checkbook and forged Art's name as drawer of a check. The drawee paid the check in good faith and sent it to Art with the monthly statement on January 3, 2008. The thief forged other checks during February and March of 2008, which the drawee in good faith paid. All paid checks were sent to Art with monthly statements. On May 25, 2009, Art discovered all of the forgeries and notified the drawee. For which check(s) is Art entitled to be reimbursed?

A certified check was presented for payment to the drawee bank, and the drawee bank dishonored the check. Which of the following parties is/are potentially liable to the holder?

Customers are precluded from asserting unauthorized signatures or alterations if they do not report them within __________ from the time the bank statement is received.