Question 1

A forged indorsement must be reported within:

Accepted Answer

A)  forty (40)days. 
B)  six (6)months. 
C)  one (1)year. 
D)  three (3)years. 
A)  forty (40)days. 
B)  six (6)months. 
C)  one (1)year. 
D)  three (3)years. D

Question 2

A bank that fails to carry out a payment order is usually liable for:

Accepted Answer

A)  interest loss and expenses. 
B)  loss sustained by the originator. 
C)  consequential damages because the payment was not made. 
D)  all of the above. 
A)  interest loss and expenses. 
B)  loss sustained by the originator. 
C)  consequential damages because the payment was not made. 
D)  all of the above. A

Question 3

Sondra realized on Tuesday that she had dropped her bank EFT card after using it at an automatic teller machine.She telephoned the bank on the following Monday to notify it of the loss.By that time,someone had used the card to withdraw $800 from Sondra's account.The bank said it would cover $300 of that amount.Sondra sued for the full amount,claiming that she had exercised reasonable care in reporting the loss,especially because the card was lost on bank premises.Will she be able to recover the full $800?

Accepted Answer

No.Sondra's liability for loss in this case can be up to $500,since she did not notify the issuer of the card within two (2)days after learning of the loss.A consumer who notifies the issuer of an EFT card within two (2)days after learning of a loss or theft of the card can be held liable to a maximum liability of $50 for unauthorized use of the card;however,failure to notify within this time will increase the consumer's liability for losses to a maximum of $500.Where she lost the card has no relevance in this case.

Question 4

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

Accepted Answer

A)  the bank could not have detected the forgery through a reasonable investigation. 
B)  there are more than two prior indorsers of the check. 
C)  the bank gives a cashier's check in payment of the depositor's check. 
D)  the drawer's negligence contributed substantially to the forging of the signature. 
A)  the bank could not have detected the forgery through a reasonable investigation. 
B)  there are more than two prior indorsers of the check. 
C)  the bank gives a cashier's check in payment of the depositor's check. 
D)  the drawer's negligence contributed substantially to the forging of the signature.

Question 5

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 3,2013.The thief forged other checks during February and March of 2013,which the drawee in good faith paid.All paid checks were sent to Art with monthly statements.On May 25,2014,Art discovered all of the forgeries and notified the drawee.For which check(s)is Art entitled to be reimbursed?

Accepted Answer

A)  none of them 
B)  all of them 
C)  the first check only 
D)  the last check only 
A)  none of them 
B)  all of them 
C)  the first check only 
D)  the last check only

Question 6

The liability for losses on counterfeit checks depends on:

Accepted Answer

A)  whether or not the bank acted reasonably in its processing systems in clearing the checks. 
B)  whether or not the bank complied with time requirements for customers regarding the checks. 
C)  both a.and b. 
D)  none of the above. 
A)  whether or not the bank acted reasonably in its processing systems in clearing the checks. 
B)  whether or not the bank complied with time requirements for customers regarding the checks. 
C)  both a.and b. 
D)  none of the above.

Question 7

When a drawee bank pays on a check that lacks an essential endorsement:

Accepted Answer

A)  the drawer is liable. 
B)  the payee is liable. 
C)  the drawee bank is liable. 
D)  no one is liable. 
A)  the drawer is liable. 
B)  the payee is liable. 
C)  the drawee bank is liable. 
D)  no one is liable.

Question 8

A forged endorsement must be reported within one year of the time that the bank statement is received.

Accepted Answer

A) True 
 B)False

Question 9

Certification of a check at the request of a holder:

Accepted Answer

A)  releases all prior secondary parties. 
B)  releases the drawer but not prior indorsers. 
C)  releases prior indorsers,but not the drawer. 
D)  does not release all prior secondary parties. 
A)  releases all prior secondary parties. 
B)  releases the drawer but not prior indorsers. 
C)  releases prior indorsers,but not the drawer. 
D)  does not release all prior secondary parties.

Question 10

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

Accepted Answer

A) True 
 B)False

Question 11

The fact that payment on a check has been stopped does not affect its negotiable character.

Accepted Answer

A) True 
 B)False

Question 12

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

Accepted Answer

A)  the bank is not because the payment was made within 20 days of the notification of the death. 
B)  the bank is potentially liable to the depositor's estate. 
C)  the bank is not liable unless the depositor's executor posted an indemnity bond. 
D)  the bank's authority to act for the depositor ended on the depositor's death,regardless of whether the bank had been notified of the depositor's death. 
A)  the bank is not because the payment was made within 20 days of the notification of the death. 
B)  the bank is potentially liable to the depositor's estate. 
C)  the bank is not liable unless the depositor's executor posted an indemnity bond. 
D)  the bank's authority to act for the depositor ended on the depositor's death,regardless of whether the bank had been notified of the depositor's death.

Question 13

Which of the following statements describes a check?

Accepted Answer

A)  The drawer is always a bank. 
B)  The maker is always a bank. 
C)  A check is generally payable on demand. 
D)  A check is a particular kind of note. 
A)  The drawer is always a bank. 
B)  The maker is always a bank. 
C)  A check is generally payable on demand. 
D)  A check is a particular kind of note.

Question 14

A check may be certified by a bank on request of the drawer or the holder.

Accepted Answer

A) True 
 B)False

Question 15

Stop payment orders:

Accepted Answer

A)  may be issued if a payee has failed to perform under a contract. 
B)  do not prevent a holder in due course from demanding payment. 
C)  are invalid for some forms of checks . 
D)  all of the above. 
A)  may be issued if a payee has failed to perform under a contract. 
B)  do not prevent a holder in due course from demanding payment. 
C)  are invalid for some forms of checks . 
D)  all of the above.

Question 16

A written stop payment order or confirmation is effective for:

Accepted Answer

A)  fourteen (14)days. 
B)  thirty (30)days. 
C)  six (6)months. 
D)  one (1)year. 
A)  fourteen (14)days. 
B)  thirty (30)days. 
C)  six (6)months. 
D)  one (1)year.

Question 17

A bank always is liable for making payments on a postdated check.

Accepted Answer

A) True 
 B)False

Question 18

A check is a particular kind of draft.

Accepted Answer

A) True 
 B)False

Question 19

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:

Accepted Answer

A)  $500. 
B)  $50. 
C)  There is no liability limitation in this situation. 
D)  There is no liability in this situation. 
A)  $500. 
B)  $50. 
C)  There is no liability limitation in this situation. 
D)  There is no liability in this situation.

Question 20

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.

Accepted Answer

A) True 
 B)False

Exam 31: Checks and Funds Transfers

A forged indorsement must be reported within:

A bank that fails to carry out a payment order is usually liable for:

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

The liability for losses on counterfeit checks depends on:

When a drawee bank pays on a check that lacks an essential endorsement:

A forged endorsement must be reported within one year of the time that the bank statement is received.

Certification of a check at the request of a holder:

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

The fact that payment on a check has been stopped does not affect its negotiable character.

Which of the following statements describes a check?

A check may be certified by a bank on request of the drawer or the holder.

Stop payment orders:

A written stop payment order or confirmation is effective for:

A bank always is liable for making payments on a postdated check.

A check is a particular kind of draft.

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:

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.

The Nature and Sources of Law

The Court System and Dispute Resolution

Business Ethics, Social Forces, and the Law

The Constitution As the Foundation of the Legal Environment

Government Regulation of Competition and Prices

Administrative Agencies

The Legal Environment of International Trade

Crimes

Torts

Intellectual Property Rights

Cyberlaw

Nature and Classes of Contracts: Contracting on the Internet

Formation of Contracts: Offer and Acceptance

Capacity and Genuine Assent

Consideration

Legality and Public Policy

Writing, Electronic Forms, and Interpretation of Contracts

Third Persons and Contracts

Discharge of Contracts

Breach of Contract and Remedies

Personal Property and Bailments

Legal Aspects of Supply Chain Management

Nature and Form of Sales

Title and Risk of Loss

Product Liability: Warranties and Torts

Obligations and Performance

Remedies for Breach of Sales Contracts

Kinds of Instruments, parties, and Negotiability

Transfers of Negotiable Instruments and Warranties of Parties

Liability of the Parties Under Negotiable Instruments

Nature of the Debtor-Creditor Relationship

Consumer Protection

Secured Transactions in Personal Property

Bankruptcy

Insurance

Agency

Third Persons in Agency

Regulation of Employment

Equal Employment Opportunity Law

Types of Business Organizations

Partnerships

LPs, LLCs, and LLPs

Corporate Formation

Shareholder Rights in Corporations

Securities Regulation

Accountants Liability and Malpractice

Management of Corporations

Real Property

Environmental Law and Land Use Controls

Leases

Decedents Estates and Trusts

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