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

An oral stop-payment order is effective for seven days.

Article 4 of the Uniform Commercial Code establishes the requirements for negotiable instruments.

Assuming the bank has proper notice,which of the following situations would not allow the bank to rightfully dishonor a check?

Why does the law generally place the risk of forgery on the payor bank,yet place the risk of unauthorized completion on the drawer? What factors would justify a difference in liability of the bank? What factors would justify a difference in liability of the drawer?

When a bank wrongfully dishonors a check,both the drawer and the payee can recover reasonable damages from the bank.

When a bank has wrongfully dishonored a check,the payee can:

Bank checks are usually considered "as good as cash" because the bank is solely or primarily liable for payment.

Which of the following is true?

Jenny has a checking account at Intrastate Bank.Jenny loses her checkbook.Richard finds it and forges a check payable to himself,indorses it,and properly negotiates it to Yummy Treats Restaurant.Yummy Treats cashes the check at Intrastate.Jenny learns of the forgery and complains to Intrastate.What are the liabilities of each of the parties involved?

When a drawee bank is presented with a check drawn on a customer's account in which there are not sufficient funds to pay the check,the bank:

The collection process is governed by Article 2 of the Uniform Commercial Code.

In connection with a checking account at a bank,what is an overdraft?

Why are there such rigid and short deadlines for banks to decide whether to pay items? Does the midnight deadline force banks into making payment decisions before they have adequate information?

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

When a payee or holder receives a check,he or she can either go to the payer bank and present the check for payment in cash,or deposit the check into the depository bank.

A bank cannot pay a drawer's check if sufficient funds are not in the drawer's account,unless prior arrangements,such as an overdraft protection line of credit,have been made.

Which of the following is characteristic of both cashier's checks and traveler's checks?

When the payee of a check indorses a check to another person (the indorsee),what is true about the indorsee?

Banks in the collection process that are not the depository or payer bank are called ________ banks.

Vicki has a checking account with Little Bank.She also has a debit card issued by Little Bank.Unfortunately,Vicki's purse and debit card are stolen when she leaves her purse in the car.Vicki realizes the theft has occurred,but is not too concerned because she took Business Law at the local community college,and seems to recall that her liability is limited to $50.As a result,she does nothing until she gets her bank statement 25 days later and sees that there was an unauthorized use of the card for $400.She calls the bank 10 days after she gets her bank statement and tells them about the purse- snatching.They refuse to credit her with the $400.Assume the Electronic Fund Transfer Act governs.Which of the following is true?