Exam 14: Checks and Banking in the Digital Age

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

Dru signs a check "pay to the order of Eppie" drawn on Dru's account in Bayside Bank. Greta forges Eppie's indorsement. Bayside pays the check. Most likely

Fact Pattern 14-1 (Questions 19 and 20 apply) 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 14-1. Capital Bank

Kris presents an instrument that states "pay to the order of Kris" to Metro Bank for payment. This is a special type of draft drawn on a bank, ordering the bank to pay a fixed amount of money on demand. This is

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

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

Fact Pattern 14-2 (Questions 30-31 apply) 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 14-2. Digital's bank is

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

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

Albert buys a surround sound system from his neighbor George at George's garage sale. Albert writes George a check for $250 for the sound system. George is

Finance Bank receives a check drawn on the account of Get-Rich Industries, Inc., one of the bank's customers, at 3 p.m. Friday. Hildy, the pre?senter of the check, is not one of the bank's customers. The bank uses de?ferred posting with a 2 p.m. cutoff hour. If it decides to dis?honor the check, it must do so by midnight

A bank that encodes information on an item after its issue warrants to any subsequent bank that the information is correct.

Trudy forges Uma's signature on a check "payable to the order of Trudy" drawn on Uma's account in Verity Bank. Most likely, if the bank pays the check

Martha has a checking account with Homeplace Bank. Martha signs a check "payable to Phillipa" drawn on Martha's account. Homeplace Bank is

A bank may contractually shift to the customer the risk of forged checks created by the use of facsimile or other nonmanual signatures.

The rights and duties of a bank and its customer are contractual.

A forged signature is effective as the signature of a drawer to the extent that is resembles the drawer's actual signature.

A bank is not responsible for determining whether a signature on a customer's check is genuine.

An oral stop payment order is valid for fourteen days.

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.