Question 1

No federal law governs payments made in:

Accepted Answer

A) point-of-sale terminals for ATM cards. 
B) telephone or Internet transfers between bank or credit union accounts. 
C) virtual currencies. 
D) preauthorized payments. 
A) point-of-sale terminals for ATM cards. 
B) telephone or Internet transfers between bank or credit union accounts. 
C) virtual currencies. 
D) preauthorized payments.

Question 2

Shawn purchases a computer from Adelaide Electronics,and writes them a check of $1,000.However,after Shawn brought the computer home,it abruptly stopped working due to a virus attack.Shawn calls his bank ordering it to stop payment on the check.Adelaide Electronics gave the check to Jack Enterprises,their creditor.Shawn's bank honored the check when Jack presented it.Which of the following is true in this case?

Accepted Answer

A) The bank is liable to recredit Shawn's account,since the bank did not follow Shawn's instructions. 
B) Shawn will be able to show that he sustained losses since the bank honored the check to Jack. 
C) The bank is not liable to recredit Shawn's account,since Shawn did not send the stop-payment order well in advance. 
D) Shawn cannot have his account recredited because he will not be able to show that he sustained any loss. 
A) The bank is liable to recredit Shawn's account,since the bank did not follow Shawn's instructions. 
B) Shawn will be able to show that he sustained losses since the bank honored the check to Jack. 
C) The bank is not liable to recredit Shawn's account,since Shawn did not send the stop-payment order well in advance. 
D) Shawn cannot have his account recredited because he will not be able to show that he sustained any loss.

Question 3

A bank is not authorized to pay a postdated check before the date on the check and charge the amount to the customer's account,unless the customer has given notice to the bank.

Accepted Answer

A) True 
 B)False

Question 4

Checks that are more than six months old are called:

Accepted Answer

A) postdated checks. 
B) altered checks. 
C) stale checks. 
D) antedated checks. 
A) postdated checks. 
B) altered checks. 
C) stale checks. 
D) antedated checks.

Question 5

Mike buys a new $25,000 turbocharged Dodge Vampire for cash.The dealer requires a certified check for that amount,so Mike gets his bank to certify his check for $25,000.One day later,the bank goes bankrupt.Rather than trying to recover in bankruptcy,the dealer pursues Mike.One of the dealer's theories is that Mike is secondarily liable on the check,and that the bank's default makes Mike liable on the instrument.Is the bank right?

Accepted Answer

No.Certification discharges th

Question 6

If a bank pays a check after it received a stop-payment order and had to reimburse its customer for the improperly paid check,what recourse does a bank have?

Accepted Answer

A) The bank can collect from its insurance company. 
B) The bank has no recourse and,as a result,suffers a loss. 
C) The bank can force its customer to sue the person to whom it paid. 
D) The bank can sue the person to whom it originally made payment. 
A) The bank can collect from its insurance company. 
B) The bank has no recourse and,as a result,suffers a loss. 
C) The bank can force its customer to sue the person to whom it paid. 
D) The bank can sue the person to whom it originally made payment.

Question 7

Which of the following defeats a bank's liability for failing to observe a stop-payment order?

Accepted Answer

A) That the order was oral rather than written. 
B) That the bank was not given 14 days to obey the order. 
C) That the bank paid a person against whom the customer did not have a defense. 
D) That the bank has the customer sign a disclaimer holding the bank harmless for its failure to exercise ordinary care and good faith regarding its handling of stop-payment orders. 
A) That the order was oral rather than written. 
B) That the bank was not given 14 days to obey the order. 
C) That the bank paid a person against whom the customer did not have a defense. 
D) That the bank has the customer sign a disclaimer holding the bank harmless for its failure to exercise ordinary care and good faith regarding its handling of stop-payment orders.

Question 8

A bank will be liable if it charges a customer for a check that is postdated and the bank was given prior notice of the postdate.

Accepted Answer

A) True 
 B)False

Question 9

Hailey wrote a check for Marsha,her landlady,on July 7 and dated it for August 1.Hailey notified her bank to not honor the check before August 1.However,the bank honored the check when Marsha presented it on July 29.Due to insufficient funds,the bank turned down the check and charged $50 to Hailey's account.Marsha terminated Hailey's rental contract for writing her a bad check.Which of the following is true?

Accepted Answer

A) The bank is not liable for any damages to Hailey since it has the right to honor a postdated check if presented earlier. 
B) Hailey can file a lawsuit against Marsha for presenting a postdated check earlier than instructed and causing her loss. 
C) Hailey is liable to pay damages to Marsha,in addition to the rent,and a $50 fine to the bank for lack of funds. 
D) The bank is liable to pay Hailey damages for honoring the check before the date mentioned in the notice. 
A) The bank is not liable for any damages to Hailey since it has the right to honor a postdated check if presented earlier. 
B) Hailey can file a lawsuit against Marsha for presenting a postdated check earlier than instructed and causing her loss. 
C) Hailey is liable to pay damages to Marsha,in addition to the rent,and a $50 fine to the bank for lack of funds. 
D) The bank is liable to pay Hailey damages for honoring the check before the date mentioned in the notice.

Question 10

If a customer does not discover a forged check and report it to the bank within one year from the time of the statement containing the check,the bank is not obligated to recredit his account for the amount of the forged check.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following refers to the technology used to verify the legitimacy or originality paper documents by using special ink,which is sensitive to magnetic fields to print the characters?

Accepted Answer

A) Remote Deposit Capture 
B) Optical Mark Reader 
C) Magnetic Ink Character Recognition 
D) Image Processing Check 
A) Remote Deposit Capture 
B) Optical Mark Reader 
C) Magnetic Ink Character Recognition 
D) Image Processing Check

Question 12

Under Article 4,which of the following refers to the drawee-payor bank's deadline on a check?

Accepted Answer

A) Midnight deadline 
B) Clearing house 
C) Banking day 
D) Afternoon deadline 
A) Midnight deadline 
B) Clearing house 
C) Banking day 
D) Afternoon deadline

Question 13

Which of the following do a certified check and a cashier's check have in common?

Accepted Answer

A) The bank is primarily liable on each. 
B) The bank is secondarily liable on each. 
C) Both are drawn by the bank on itself. 
D) Technically,the bank is not liable to a holder of either kind of check. 
A) The bank is primarily liable on each. 
B) The bank is secondarily liable on each. 
C) Both are drawn by the bank on itself. 
D) Technically,the bank is not liable to a holder of either kind of check.

Question 14

The time period within which a customer must report unauthorized customer signatures to the bank to get his account recredited is:

Accepted Answer

A) fourteen days. 
B) six months. 
C) one year. 
D) three years. 
A) fourteen days. 
B) six months. 
C) one year. 
D) three years.

Question 15

Boston Bank receives one of their payable checks made to the order of the Same Sex Alliance organization of Massachusetts for $1,000.The check comes from a valid account and there are funds in that account to cover the check.The CEO of Boston Bank does not agree with the mission of the Same Sex Alliance and refuses to honor the check.Boston Bank is within its power as a bank to do this.

Accepted Answer

A) True 
 B)False

Question 16

An oral stop-payment order normally is good for 14 days.

Accepted Answer

A) True 
 B)False

Question 17

________ is when a bank observes the reasonable commercial standards prevailing among other banks in the area in which it does business.

Accepted Answer

A) Good faith 
B) Ordinary care 
C) Reasonable care 
D) Due care 
A) Good faith 
B) Ordinary care 
C) Reasonable care 
D) Due care

Question 18

Under the recent amendments to Article 4,postdated checks:

Accepted Answer

A) are now invalid and create no obligation to pay on the drawee bank's part. 
B) are not properly payable by the drawee bank until the date on the check. 
C) may be paid by the drawee bank before the date on the check unless the customer has given notice to the contrary. 
D) may be paid by the drawee bank unless the customer gives notice of the postdating in a way that at least partially describes the check. 
A) are now invalid and create no obligation to pay on the drawee bank's part. 
B) are not properly payable by the drawee bank until the date on the check. 
C) may be paid by the drawee bank before the date on the check unless the customer has given notice to the contrary. 
D) may be paid by the drawee bank unless the customer gives notice of the postdating in a way that at least partially describes the check.

Question 19

On June 1,Dave Drawer writes a check to Pete Payee.The check is postdated to July 1.Nonetheless,Pete presents the check for payment at Dave's bank on June 15,and receives payment on that date.After Dave learns of this,he screams bloody murder,arguing that the check was not properly payable and that the bank should recredit his account.Is Dave right? Assume that the check is otherwise properly payable,and that Dave never told the bank about it before Pete presented it.

Accepted Answer

No,Dave is not right.Under the amended v

Question 20

A stop-payment order is authorized by the:

Accepted Answer

A) bearer. 
B) creditor. 
C) drawer. 
D) drawee. 
A) bearer. 
B) creditor. 
C) drawer. 
D) drawee.

Exam 34: Checks and Electronic Transfers

No federal law governs payments made in:

A bank is not authorized to pay a postdated check before the date on the check and charge the amount to the customer's account,unless the customer has given notice to the bank.

Checks that are more than six months old are called:

If a bank pays a check after it received a stop-payment order and had to reimburse its customer for the improperly paid check,what recourse does a bank have?

Which of the following defeats a bank's liability for failing to observe a stop-payment order?

A bank will be liable if it charges a customer for a check that is postdated and the bank was given prior notice of the postdate.

If a customer does not discover a forged check and report it to the bank within one year from the time of the statement containing the check,the bank is not obligated to recredit his account for the amount of the forged check.

Which of the following refers to the technology used to verify the legitimacy or originality paper documents by using special ink,which is sensitive to magnetic fields to print the characters?

Under Article 4,which of the following refers to the drawee-payor bank's deadline on a check?

Which of the following do a certified check and a cashier's check have in common?

The time period within which a customer must report unauthorized customer signatures to the bank to get his account recredited is:

An oral stop-payment order normally is good for 14 days.

________ is when a bank observes the reasonable commercial standards prevailing among other banks in the area in which it does business.

Under the recent amendments to Article 4,postdated checks:

A stop-payment order is authorized by the:

The Nature of Law

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

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Intentional Torts

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The Agreement: Offer

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Consideration

Reality of Consent

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Product Liability

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Landlord and Tenant

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Insurance Law

Introduction to Credit and Secured Transactions

Security Interests in Personal Property

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Negotiation and Holder in Due Course

Liability of Parties

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