Exam 17: Checks and Banking in the Digital Age

A bank cannot recover from a holder who cashes a check bearing a forged indorsement once the bank has accepted and paid the item.

The bank on which a check is drawn is the payor bank.

A written stop payment order is valid for fourteen days.

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

Generally,a bank has no obligation to pay a customer's overdrafts.

Fact Pattern 17-1 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 17-1.Capital Bank pays the check.Capital

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

Certified checks are instruments that have been accepted for payment by the institutions on which they are drawn.

Dan writes a check to Emma on his account at First State Bank.The bank dishonors the check even though Dan has sufficient funds in his account.The bank is

Ian buys a cell phone in Jiffy Mart,using the means that accounts for more retail payments than any other.This means of payment is

Generally,the funds represented by a deposited local check must be available for withdrawal the same business day.

An oral stop payment order is valid for thirty days.

The Federal Reserve System acts as a clearinghouse where banks exchange checks.

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

Scott presents an instrument that states "pay to the order of Scott" to Town Bank for payment.This instrument is the most common type of negotiable instrument,which is

Fact Pattern 17-1 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 17-1.Capital Bank

Elmo pays First National Bank $1,000 plus a service fee to draw a check on itself made payable to Go Delivery Service.This is

John writes a check to Kay as payment for a DVD player but soon discovers the player is broken.He goes to the drawee bank and orally authorizes Larry,a bank officer,to stop payment on the check.This order is valid for

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

A bank is subject to a civil suit if its customer writes a bad check.