Exam 27: Bank Deposits Collections and Funds Transfers

Caryn deposits a check in her bank at 2:30 on Monday. The bank may, under the Code, treat the check as having been deposited on Tuesday for purposes of meeting the midnight deadline rule.

Under Revised Article 4, if a bank pays a postdated instrument prior to its date, it will be a proper debit to the drawer's account, unless the drawer had timely informed the drawee that the check was postdated.

If First Bank receives a check for collection on Friday at 4:30 p.m., it does not have to present the check to the payor bank by midnight Saturday.

If a depositor in Mercury Bank takes a check written on Valley Bank to Mercury Bank to deposit, it will not normally be credited to his account until collected from the payor bank.

Theresa has just started working for Citizens Bank as a teller. A man comes into the bank with a $100 check that is 8 months old. She goes to the manager to ask whether she should pay it. If you were the manager, what would you advise her? Explain.

If a drawer files a stop payment order on a check, he is automatically relieved of liability for the obligation.

A payment order for a wholesale funds transfer must:

Point-of-sale systems permit customers to charge items to a charge account at a bank.

Collecting banks give to a transferee the same basic warranties as those given by other parties who transfer commercial paper, except they also may give encoding warranties.

Which warranties does a collecting bank give?

A bank may pay a check after the death of its customer for ten days following the date of his death unless a person claiming an interest in the account orders the bank to stop making such payments.

David dies an untimely death in a boating accident two days after writing a check to his landlord. The bank finds out about David's death the day after it happens. When the landlord presents the check to the bank two weeks later, the bank must pay it unless David's heirs object.

What are a payor bank's rights to subrogation upon an improper payment of an instrument?

When a payor bank gets an item payable from a customer's account with insufficient funds, the bank may:

Yasmin tries to make a $75 withdrawal from an ATM, which is well within his daily allowed limit and less than the amount in his account, but he is unable to withdraw the money because the terminal has run out of cash. The bank is liable to Yasmin for damages proximately caused by its failure to make the EFT.

What is electronic funds transfer? Why is it beneficial for banks? What provisions are in the law to protect the customer who uses electronic funds transfer?

A payor bank is required to dishonor an uncertified check that is more than six months old.

Which of the following is correct with respect to a bank customer's duty to discover and report unauthorized signatures?

Adjudication of drawer's incompetence will not affect the bank's ability to act with respect to the drawer until the bank knows and has a reasonable opportunity to act on this knowledge.

If a bank receives a check on Tuesday, it must take proper action, such as forwarding or presenting it, by midnight of Wednesday.