Question 1

The relationship between a depositor and a bank is governed by the deposit agreement and Articles 3 and 4 of the UCC.

Accepted Answer

A) True 
 B)False  True

Question 2

Which of the following is an EXCEPTION to the mandatory availability schedules of the Expedited Funds Availability Act?

Accepted Answer

A) Cashier's checks 
B) Teller's checks 
C) Electronic payments 
D) New accounts 
A) Cashier's checks 
B) Teller's checks 
C) Electronic payments 
D) New accounts D

Question 3

Which of the following is true in case of death or incompetence of a customer?

Accepted Answer

A) A bank cannot pay checks of a deceased customer until it has notice of the customer's death. 
B) If a bank knows of a customer's death,it can pay checks written by the customer prior to his/her death,for a period of 30 days. 
C) The deceased person's heirs or other persons claiming an interest in the account can order the bank to stop payment. 
D) A bank can declare checks signed by the customer while he/she was alive,as null and void. 
A) A bank cannot pay checks of a deceased customer until it has notice of the customer's death. 
B) If a bank knows of a customer's death,it can pay checks written by the customer prior to his/her death,for a period of 30 days. 
C) The deceased person's heirs or other persons claiming an interest in the account can order the bank to stop payment. 
D) A bank can declare checks signed by the customer while he/she was alive,as null and void. C

Question 4

In the case in the text Cincinnati Insurance Company v.Wachovia Bank National Association,what was the court's holding?

Accepted Answer

A) The bank was not liable because it limited its liability in the contract. 
B) The bank was not liable because it acted in good faith. 
C) The bank was liable because it did not provide any precautions to prevent fraud. 
D) The bank was liable because it could not waive its liability in the contract. 
A) The bank was not liable because it limited its liability in the contract. 
B) The bank was not liable because it acted in good faith. 
C) The bank was liable because it did not provide any precautions to prevent fraud. 
D) The bank was liable because it could not waive its liability in the contract.

Question 5

In case a check is altered so skillfully that a bank is unable to detect the alteration,which of the following stands true?

Accepted Answer

A) The bank should honor only those checks for which it receives a notice from the drawer. 
B) The bank is allowed to charge to the account the amount for which the check originally was written. 
C) The bank will be liable to recredit the drawer's account for negligence. 
D) The bank will hold the drawer responsible for contributing to the alteration of the check. 
A) The bank should honor only those checks for which it receives a notice from the drawer. 
B) The bank is allowed to charge to the account the amount for which the check originally was written. 
C) The bank will be liable to recredit the drawer's account for negligence. 
D) The bank will hold the drawer responsible for contributing to the alteration of the check.

Question 6

________ truncation refers to when the drawee bank keeps the original checks,in contrast to ________ truncation,where the payee keeps the original check.

Accepted Answer

A) Process;radical 
B) Check;process 
C) Check;radical 
D) Radical;check 
A) Process;radical 
B) Check;process 
C) Check;radical 
D) Radical;check

Question 7

In the case in the text,Anderson v.Branch Banking and Trust Company,why did the court find in favor of the bank?

Accepted Answer

A) The plaintiffs failed to timely respond to the bank's motion to dismiss. 
B) The plaintiffs waived any liability the bank would have had. 
C) The plaintiffs failed to comply with the notice requirement under the contract. 
D) The plaintiffs could not show that the bank failed to use ordinary care. 
A) The plaintiffs failed to timely respond to the bank's motion to dismiss. 
B) The plaintiffs waived any liability the bank would have had. 
C) The plaintiffs failed to comply with the notice requirement under the contract. 
D) The plaintiffs could not show that the bank failed to use ordinary care.

Question 8

Prof.Bob DeSlob writes a check on his Big Bank checking account for $1 payable to "Department of Business Law Coffee Club" to pay for his weekly membership and gives it to his colleague Carol.Bob does not place a decimal point after the "1" nor does he complete the line ending in "dollars." Carol,knowing that Bob can well afford it,prints in block letters the words "One Hundred" on the line ending in "dollars." Carol then gives the check to Dot,the department secretary,who is in charge of the Coffee Club.Dot presents the check to Big Bank for payment,and Big Bank charges $100 from Bob's account.Which of the following statements is most accurate?

Accepted Answer

A) Bob's account must be recredited $99. 
B) Bob's account must be recredited $100. 
C) Bob contributed to the alteration and may be barred from claiming forgery. 
D) Bob had a duty to place a stop-payment order on the check. 
A) Bob's account must be recredited $99. 
B) Bob's account must be recredited $100. 
C) Bob contributed to the alteration and may be barred from claiming forgery. 
D) Bob had a duty to place a stop-payment order on the check.

Question 9

Which of the following is true of the Check 21 Act?

Accepted Answer

A) It allows banks to handle a limited number of checks electronically. 
B) It has made it mandatory for banks to return the canceled checks to the customers. 
C) It authorizes banks to transform information they receive in electronic form back into a paper copy of the check. 
D) It requires that banks keep the customers' original checks for a specified period of time. 
A) It allows banks to handle a limited number of checks electronically. 
B) It has made it mandatory for banks to return the canceled checks to the customers. 
C) It authorizes banks to transform information they receive in electronic form back into a paper copy of the check. 
D) It requires that banks keep the customers' original checks for a specified period of time.

Question 10

Which of the following is most true about stop-payment orders?

Accepted Answer

A) Their validity is only for 14 days. 
B) Their validity is only for six months. 
C) They must give the bank 14 days to act on the order. 
D) They can be oral or written. 
A) Their validity is only for 14 days. 
B) Their validity is only for six months. 
C) They must give the bank 14 days to act on the order. 
D) They can be oral or written.

Question 11

Due to Susan Sharp's many fraudulent misstatements,Nelly Nice buys Susan's car.Nelly writes Susan a check for $5,000 in payment.Susan immediately negotiates the check to Patty Proper,who qualifies as a holder in due course.In the meantime,Nelly discovers that the car is junk and makes a timely and proper stop-payment order to her bank.However,when Patty presents the check for payment,the bank pays it anyway.Is the bank required to recredit Nelly's account?

Accepted Answer

No,the bank is not required to recredit

Question 12

A bank may,but need not,pay any checks that are more than six months old.

Accepted Answer

A) True 
 B)False

Question 13

A ________ is a request made by a customer of a drawee bank instructing it not to pay or certify a specific check.

Accepted Answer

A) cut-off request 
B) canceled check 
C) stop-payment order 
D) void check 
A) cut-off request 
B) canceled check 
C) stop-payment order 
D) void check

Question 14

Wire transfer is used for transfer of funds across the country or around the world.This service is generally used by large business and financial institutions.

Accepted Answer

A) True 
 B)False

Question 15

Under the Electronic Funds Transfer Act how many days do operators of EFT systems have to investigate errors or provisionally recredit a consumer's account?

Accepted Answer

A) 10 working days 
B) 60 days 
C) 14 working days 
D) 90 days 
A) 10 working days 
B) 60 days 
C) 14 working days 
D) 90 days

Question 16

A bank is within its rights to ask a customer to sign a form to:

Accepted Answer

A) disclaim its responsibility to act in good faith. 
B) limit its liability for a stop-payment order or damages if it fails to obey the order. 
C) disclaim its duty to exercise ordinary care in paying a check over a stop-payment order. 
D) limit its liability for negligence. 
A) disclaim its responsibility to act in good faith. 
B) limit its liability for a stop-payment order or damages if it fails to obey the order. 
C) disclaim its duty to exercise ordinary care in paying a check over a stop-payment order. 
D) limit its liability for negligence.

Question 17

Banks are not required to disclose their funds availability policy to all of their customers.

Accepted Answer

A) True 
 B)False

Question 18

Banks typically put a ________ on the depositor's ability to access some or all of the funds represented by the instrument until it ________ through the system.

Accepted Answer

A) halt;clears 
B) hold;passes 
C) hold;clears 
D) halt;passes 
A) halt;clears 
B) hold;passes 
C) hold;clears 
D) halt;passes

Question 19

When there are insufficient funds in a drawer's account,and a check is presented to be honored,the bank can:

Accepted Answer

A) honor the check,and charge the customer on the next deposit. 
B) return the check,and charge a penalty. 
C) hold the check and payment,even if the holder suffers a loss against the drawer. 
D) charge a fee to the holder in due course and to the drawer. 
A) honor the check,and charge the customer on the next deposit. 
B) return the check,and charge a penalty. 
C) hold the check and payment,even if the holder suffers a loss against the drawer. 
D) charge a fee to the holder in due course and to the drawer.

Question 20

Under the Expedited Funds Availability Act,customers can draw upon checks deposited in their checking account within:

Accepted Answer

A) the second business day following deposit,if the drawee bank is in the same Federal Reserve check-processing region as the depositary bank. 
B) one week following deposit,if the drawee bank is in a different Federal Reserve check-processing region than the depositary bank. 
C) three days after the deposit,in the case of checks drawn on the U.S.Treasury. 
D) five days of deposit in the case of cashier's checks. 
A) the second business day following deposit,if the drawee bank is in the same Federal Reserve check-processing region as the depositary bank. 
B) one week following deposit,if the drawee bank is in a different Federal Reserve check-processing region than the depositary bank. 
C) three days after the deposit,in the case of checks drawn on the U.S.Treasury. 
D) five days of deposit in the case of cashier's checks.

Exam 34: Checks and Electronic Transfers

The relationship between a depositor and a bank is governed by the deposit agreement and Articles 3 and 4 of the UCC.

Which of the following is an EXCEPTION to the mandatory availability schedules of the Expedited Funds Availability Act?

Which of the following is true in case of death or incompetence of a customer?

In the case in the text Cincinnati Insurance Company v.Wachovia Bank National Association,what was the court's holding?

In case a check is altered so skillfully that a bank is unable to detect the alteration,which of the following stands true?

________ truncation refers to when the drawee bank keeps the original checks,in contrast to ________ truncation,where the payee keeps the original check.

In the case in the text,Anderson v.Branch Banking and Trust Company,why did the court find in favor of the bank?

Which of the following is true of the Check 21 Act?

Which of the following is most true about stop-payment orders?

A bank may,but need not,pay any checks that are more than six months old.

A ________ is a request made by a customer of a drawee bank instructing it not to pay or certify a specific check.

Wire transfer is used for transfer of funds across the country or around the world.This service is generally used by large business and financial institutions.

Under the Electronic Funds Transfer Act how many days do operators of EFT systems have to investigate errors or provisionally recredit a consumer's account?

A bank is within its rights to ask a customer to sign a form to:

Banks are not required to disclose their funds availability policy to all of their customers.

Banks typically put a ________ on the depositor's ability to access some or all of the funds represented by the instrument until it ________ through the system.

When there are insufficient funds in a drawer's account,and a check is presented to be honored,the bank can:

Under the Expedited Funds Availability Act,customers can draw upon checks deposited in their checking account within:

The Nature of Law

The Resolution of Private Disputes

Business and the Constitution

Business Ethics, Corporate Social Responsibility, Corporate Governance, and Critical Thinking

Criminal Law and Procedure

Intentional Torts

Negligence and Strict Liability

Intellectual Property and Unfair Competition

Introduction to Contracts

The Agreement: Offer

The Agreement: Acceptance

Consideration

Reality of Consent

Capacity to Contract

Illegality

Writing

Rights of Third Parties

Performance and Remedies

Formation and Terms of Sales Contracts

Product Liability

Performance of Sales Contracts

Remedies for Breach of Sales Contracts

Personal Property and Bailments

Real Property

Landlord and Tenant

Estates and Trusts

Insurance Law

Introduction to Credit and Secured Transactions

Security Interests in Personal Property

Bankruptcy

Negotiable Instruments

Negotiation and Holder in Due Course

Liability of Parties

The Agency Relationship

Third-Party Relations of the Principal and the Agent

Introduction to Forms of Business and Formation of Partnerships

Operation of Partnerships and Related Forms

Partners Dissociation and Partnerships Dissolution and Winding up

Limited Liability Companies, limited Partnerships, and Limited Liability Limited Partnerships

History and Nature of Corporations

Organization and Financial Structure of Corporations

Management of Corporations

Shareholders Rights and Liabilities

Securities Regulation

Legal and Professional Responsibilities of Auditors, Consultants, and Securities Professionals

Administrative Law

The Federal Trade Commission Act and Consumer Protection Laws

Antitrust: the Sherman Act

The Clayton Act, the Robinsonpatman Act, and Antitrust Exemptions and Immunities

Employment Law

Environmental Regulation

Filters

truncation refers to when the drawee bank keeps the original checks,in contrast to truncation,where the payee keeps the original check.

Banks typically put a on the depositor's ability to access some or all of the funds represented by the instrument until it through the system.