Exam 20: Banking in the Digital Age

The rights and duties of a bank and its customer are contractual.

A customer can stop payment on a check that has been certified or accepted by a bank.

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

Only a customer or a person authorized to draw on an account can order a bank not to pay a check when it is presented for payment.

Travis signs a check "pay to the order of Umberto" drawn on Travis's account in Valley Bank. Travis has $400 in his account but the amount of the check is $500, which the bank pays. This is

Dhani signs a check "pay to the order of Eton" drawn on Dhani's account in Fidelity guaranty Bank and dates the check "May 1." Eton presents the check to the bank for payment on December 15. This is​

The first bank to receive a check for payment is the intermediary bank.

Brandy forges Caleb's signature on a check "payable to the order of Brandy" drawn on Caleb's account in Downtown Bank. Caleb's forged signature is​

Tomas writes a check for $1,000 drawn on Unified Bank and presents it to Viola. Viola presents the check for payment to Unified Bank, which dishonors it. The party most likely liable to Viola is

A check that is presented for payment more than six months from its date is a stale check.

Simon signs a check "pay to the order of Tilly" drawn on Simon's account in United Bank. Vela forges Tilly's indorsement, Western Bank cashes the check, and Vela disappears. United pays Western and debits Simon's account. Most likely, the ultimate loss will fall on​

Dalton presents an uncertified check for payment more than six months after its date. The check was drawn by Emma on her account in First City Bank. If First City follows the usual banking practice in such a case, it will

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?​

Franco buys a sound system from Georg at Georg's garage sale. Franco writes Georg a check for $250 to pay for the system. Georg 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

Joni writes Keizer an uncertified check for $500 drawn on Joni's account at Labor Employees Credit Union. Seven months later, Keizer presents the check for payment. The credit union pays the check in good faith without consulting Joni. The credit union​

Cleo writes a check for $100 drawn on Debit & Credit Bank and presents it to Elegant Jewelers for payment. If the check is not backed by sufficient funds, Cleo may be prosecuted for​

A substitute check is a paper reproduction of the front and back of an original check that contains all the same information required on checks for automated processing.

The incompetence of a customer revokes a bank's authority to pay an item.

Each bank in a collection chain must pass a check on before midnight of the day of its receipt.