Exam 22: Checks and Banking in the Digital Age

Luc writes a check for $1,000 drawn on Ridgetop Bank and presents it to Bianca. Bianca presents the check for payment to Ridgetop Bank, which dis?hon?ors it for insufficient funds. The party most likely liable to Bianca is

Fact Pattern 22-2 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 22-2. Digital's bank is

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

Elton presents an uncertified check for payment more than six months after its date. The check was drawn by Dakota on her account in First Community Bank. The usual banking practice in such a case is to

If a customer does not have sufficient funds to pay a check available in his or her checking account and the bank dishonors the check, the bank is liable to the customer.

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

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

Roald writes a check for $700 to Savannah. Savannah indorses the check in blank and transfers it to Twitchell, who alters the check to read $7,000 and presents it to Union Bank, the drawee, for payment. The bank cashes it. Roald discovers the alter?ation and files a suit against the bank. Roald can recover

When a customer deposits cash into a checking account, he or she becomes a debtor for the amount deposited.

Today, most checks are processed manually.

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

A bank may not pay any checks on a customer's account after the date of the customer's death.

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

Mary writes a check drawn on County Bank for $400 "payable to Bill" on May 1. Mary dies on May 3. Bill presents the check to County Bank on May 5. County Bank

A customer has a right to stop payment on a check that has been certified or accepted by a bank.

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

A written stop payment order is valid for only thirty days.

A substitute check is a paper reproduction of the front and back of an original 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?

Little Local Bank wrongfully fails to honor a check signed by its customer Andrea. Little Local Bank is