Exam 22: Banking System, E-Money, and Financial Reform

The Uniform Commercial Code places the risk of loss on an incomplete check on the:

Mark sold his car to Mary.Mary paid with a certified check.The check was made out for $18,000,the agreed-upon price for the car.After they had exchanged paperwork and closed the deal on the car,Mark noticed that the bank had certified the check for $10,000,rather than the $18,000 amount of the check.Mark then altered the check to be for $28,000.How much must the bank pay on the check?

Uniform Commercial Code Section 3-104(f)defines a check as an order by the drawer to the drawee bank to pay a specified sum of money from the drawer's checking account to the named payee (or holder).

Prior to the 1920s,the banking system in the United States was subject to strict regulation by the federal government.

Certified checks and cashier's checks are also known as ________ checks.

A check that has been outstanding from more than ________ is considered "stale," and the bank is under no obligation to pay it.

If the same wrongdoer engages in a series of forgeries or alterations on the same account,the customer must report that the payer bank within a reasonable period of time,not exceeding ________ from the date that the bank statement was made available to the customer.

A bank's refusal to certify a check constitutes a dishonor of the check.

The drawer's failure to report a forged or altered check to the bank within one year of receiving the bank statement and cancelled checks containing it relieves the bank of any liability for paying the instrument.

The drawee is the customer who maintains the checking account and writes (draws)checks against the account.

Drawers sometimes write checks that omit certain information,such as the amount of the check or the payee's name,either on purpose or by mistake.These are called ________ checks.

The Federal Currency Reporting Law requires financial institutions to file a Currency Transaction Report with the Internal Revenue Service,reporting the receipt in a single transaction or a series of related transactions of cash in an amount greater than:

Drawers sometimes write checks that omit certain information,such as the amount of the check or the payee's name,either on purpose or by mistake.These are called "implied-in-law" checks.

Regarding the bank collection process,for an "on them" item,the drawee is also the:

When a customer opens a checking account at a bank,the customer impliedly agrees to keep sufficient funds in the account to pay any checks written against it.

Assume a drawer gives an incomplete check to a payee without including the amount of the check,and the payee completes the check by filling in a higher amount than that authorized by the drawer; if the bank pays the check according to the unauthorized terms,the drawer is generally liable for payment of the check as completed.

Certified checks never become stale.

If a bank does not honor a check when there are sufficient funds in a drawer's account to pay a properly payable check,it is liable for wrongful dishonor.

Banks are liable for any damages caused by paying any postdated check prior to its date.

There are three (3)parties to an ordinary check: (1)the ________,the customer who maintains the checking account and writes checks against the account; (2)the ________,the bank on which the check is drawn; and (3)the ________,the party to whom a check is written.