Exam 19: Checks and Banking in the Digital Age

Fact Pattern 19-3 Ryley draws a check,on his account in Second National Bank in New York,payable to Tuner TV,Inc. ,in San Francisco.Tuner deposits the check in its ac?count at US Bank.US deposits the check in the Federal Reserve Bank of San Francisco,which transfers it to the Federal Reserve Bank of New York.That Federal Reserve bank sends the check to Second National. -Refer to Fact Pattern 19-3.US Bank (Tuner's bank)is

A customer has sixty days from the date of receipt of a statement of an electronic transfer to notify the financial institution of any er?rors.

To transfer checkbook dollars among different banks,each bank acts as an agent of collection for its customer.

E-Bank,an online financial institution,gives financial information about Paula and other customers to a federal agency without the cus?tomers' permission.E-Bank may be liable under

A bank is never obligated to recredit a customer's account when it pays a check with the cus?tomer's forged signature.

Esau writes a check drawn on Flex Bank to pay Grey Office Supply for six filing cabinets.Later,Esau discovers defects in the goods and orders the bank to stop payment on the check.Esau does not renew the order,and the bank clears the check eight months later.The bank

Fleece Bank receives a check drawn on the account of Get-Rich Industries,Inc. ,one of the bank's customers,at 3 p.m.Friday.Harry,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

City Bank mistakenly transfers $1,000 from the account of Deanna,its cus?tomer,to the account of Earl in First Federal Bank.The transfer is done electronically.When City Bank learns of the mistake,it credits Deanna's account and asks First Federal to "return" $1,000.First Federal refuses.City Bank files a suit against First Federal,claiming that it is violation of the Electronic Fund Transfer Act.How might the court rule?

Digital cash consists of funds stored on microchips.

Fact Pattern 19-2 Ruth opens a checking account with State Bank.The bank agrees to accept responsibility for the difference between the original amount of any check that Ruth draws on the account and the amount actually paid on the item due to its unauthorized but undetected alteration. -Refer to Fact Pattern 19-2.Ruth writes a check for $50 "payable to the order of Tom." Tom alters the amount to $5,000 and cashes the altered check at State Bank.State Bank files a suit against Ruth to recover $4,950.The court is most likely to rule that

When a bank pays a check on which the drawer's signature is forged,generally the customer suffers the loss.

Simplex Wholesalers,Inc. ,asks Theta Purchasing Com?pany to pay for goods with a certified check.A cer?tified check

Federal laws that prohibit unauthorized access to electronic communica?tions may apply to e-money transactions.

Fact Pattern 19-2 Ruth opens a checking account with State Bank.The bank agrees to accept responsibility for the difference between the original amount of any check that Ruth draws on the account and the amount actually paid on the item due to its unauthorized but undetected alteration. -Refer to Fact Pattern 19-2.The agreement between Ruth and State Bank

Quimby writes a check to Rico on May 1 that is drawn on Quimby's ac?count at Seven Seas Bank.Rico presents the check on December 15.The bank is

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

Joy steals a check from Kyle,forges his signature,and transfers the check to Loco Loans,Inc. ,for value.Unaware that the signature is not Kyle's,Loco Loans presents the check to Metro Bank,the drawee,which cashes the check.Kyle discovers the forgery and insists that Metro recredit his account.Can Metro refuse? If not,from whom can the bank recover?

A stale check is one that has been outstanding for longer than six months.

Fact Pattern 19-1 Viva takes her car to We-Can-Fix-It,Inc. ,which repairs the car and bills her for $500.She writes a check drawn on Xenon Bank,but later,believing that We-Can-Fix-It did not repair the car properly,issues a stop-payment order. -Refer to Fact Pattern 19-1.Xenon Bank

Grande Bank has fourteen branch offices.Grande must establish market areas next to these offices under