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Exam 28: Banking

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Question 31

True/False

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The contractual rights and duties of the bank and the customer depend on the nature of the transaction.

A) True
B) False

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Question 32

Multiple Choice

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Kobe signs a check "pay to the order of Liu" drawn on Kobe's account at Main Street Bank. He later orders the bank not to pay the check, but the bank pays it over his order. Subsequent checks written on the account "bounce." Most likely liable for the costs to Kobe is

A) any party to whom a subsequent check was written.
B) Kobe.
C) Liu.
D) Main Street Bank.

E) A) and B)
F) A) and C)

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Question 33

Multiple Choice

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Quito writes a check to Roy on Quito's account at Sterling Bank. The bank dishonors the check because Quito has insufficient funds in his account. The bank is liable to

Franco buys a sofa from Grey at a garage sale. Franco writes Grey a check for $50 to pay for the couch. Grey is

Gary writes a check drawn on Hill Bank for $400 "payable to Ian" on May 1. Gary dies on May 3. Ian presents the check to the bank on May 5. Unaware of Gary's death, the bank

Nan writes a check for $1,000 drawn on Omni Bank payable to Posy. Posy presents the check for payment to Omni Bank, which dishonors it. The party most likely liable to Posy is

If a bank does not dishonor an "on-us" item by the opening of the second banking day following its receipt, the check is considered paid.

Allys writes a check to Beri on Allys' account at Community Bank. The bank dishonors the check even though Allys has sufficient funds in her account. The bank is liable to

The destruction of an original check after the creation of a substitute check prevents the check from being paid twice.

Dana draws a check on Equity Bank, and asks the bank to agree in advance to accept the check by setting aside sufficient funds to cover the amount. If Equity agrees, the check will be considered

Smith & Jones P.A. is a business customer of Tri-State Bank. Under federal law, Smith & Jones cannot demand

Nick steals two checks from Pauline-a blank check and a check payable to the order of Retail Outlets Company, drawn on Pauline's account with State Bank. Nick forges Pauline's signature on the blank check and makes it payable to himself. Nick forges Retail Outlets' indorsement on the back of the check payable to Retail Outlets, and adds, "Pay to the order of Nick." At United Credit Union, Nick indorses the back of both checks with his own name and gives them to United for cash. United does not know about the theft or the forged signatures and presents the checks to State Bank, which pays them. Pauline, who was not negligent, discovers the forgeries and asks State Bank to recredit her account. Who suffers the loss on each check?

Dallas presents an uncertified check for payment more than six months after its date. The check was drawn by Emma on her account in First Bank. If the bank follows the usual banking practice in such a case, it will

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

A customer's negligence cannot shift the loss when payment is made on a check with an altered amount.

Bern signs a check "pay to the order of College Bookstore" drawn on his account at Debit Bank to buy textbooks. Bern is

A bank is not obligated to pay an uncertified check presented for payment more than six months from its date.

Boris can write checks on his account at City Bank. Demi steals the checks, forges Boris's signature, and cashes the checks at City Bank. The bank is excused from any liability if, after receipt of the first forged check, Boris fails to report the forgeries within

On an automated teller machine (ATM)belonging to USA Bank, Sven placed a card-skimming device to pull information from the magnetic strips of users' debit cards. The device then transmitted the stolen data to thieves who used it to gain access to, and empty, the bank accounts of the users, including Megan. Megan learned of the theft the next day and promptly notified USA. Is Megan entitled to a recredit of her account for the most of the loss due to the theft? Explain.

If any part of a commercial electronic fund transfer is covered by the Electronic Fund Transfer Act, the entire transaction is excluded from UCC Article 4A.