Exam 18: Checks and Banking in the Digital Age

Rikki signs a check "pay to the order of Scholar University" drawn on Rikki's account in Town Bank to pay her tuition.Rikki is

Jacob writes Phillip an uncertified check for $500 on January 1.Seven months later,Phillip presents the check at the bank.The bank pays the check in good faith without consulting Jacob.The bank

Today,most checks are processed manually.

Fact Pattern 18-2 Tom draws a check,on his account in State Bank in New York,payable to Digital Media,Inc.,in San Francisco.Digital deposits the check in its ac-count at First National Bank. -Refer to Fact Pattern 18-2. Digital's bank is

Stored-value cards are a form of digital cash.

Kris presents an instrument that states "pay to the order of Kris" to Metro Bank for payment.This is a special type of draft drawn on a bank,ordering the bank to pay a fixed amount of money on demand.This is

Valley Bank retains the cancelled checks of its customers.Valley must be able to provide customers with legible copies of checks paid for

A bank that pays a customer's check with a forged drawer's signature can generally pass the loss onto the customer.

Dru signs a check "pay to the order of Eppie" drawn on Dru's account in Bayside Bank.Greta forges Eppie's indorsement.Bayside pays the check.Most likely

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

A check is not a substitute for cash.

Brendan signs a check "pay to the order of City College Bookstore" drawn on his account in Delta Bank to pay for his current semester's textbooks.The bookstore deposits the check in its account in Eagle Bank.Like most checks,this check is

Joy steals a check from Kyle,forges his signature,and transfers the check to Loco Loans,Inc.,for value.Unaware that the signature is not Kyle's,Loco Loans presents the check to Metro Bank,the drawee,which cashes the check.Kyle discovers the forgery and insists that Metro recredit his account.Can Metro refuse? If not,from whom can the bank recover?

Martha has a checking account with Homeplace Bank.Martha signs a check "payable to Phillipa" drawn on Martha's account.Homeplace Bank is

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

Ellen pays State Bank $500 plus a service fee to draw a check on itself payable to Paul's Plumbing.Which of the following parties is responsible for paying the check?

Hoppy steals two checks from Eagle Retail Stores,Inc.-a blank check and a check payable to the order of General Supplies Company (GSC),drawn on Eagle's account with First National Bank.Hoppy forges Eagle's signa-ture on the blank check and makes it payable to himself.Hoppy forges GSC's indorsement on the back of the check payable to GSC,and adds "Pay to the order of Hoppy." At Friendly Credit,Inc.,Hoppy indorses the back of both checks with his own name and gives them to Friendly for cash.Friendly does not know about the theft or the forged signatures and presents the checks to First National,which pays them.Eagle,which was not negli-gent,discovers the forgeries and asks First National to recredit its ac-count.Who suffers the loss on each check?

Fact Pattern 18-1 Echo takes her car to Fix-It,Inc.,which repairs the car and bills Echo for $500.Echo writes out a check drawn on Capital Bank,but later,believing that Fix-It did not repair the car properly,issues a stop-payment order. -Refer to Fact Pattern 18-1.Capital Bank pays the check.Capital

A point-of-sale system is a type of electronic fund transfer system.

Albert buys a surround sound system from his neighbor George at George's garage sale.Albert writes George a check for $250 for the sound system.George is