Exam 18: Banking in the Digital Age

Fact Pattern 18-1 Kelly takes her car to Auto Repair Service, which repairs the car and bills Kelly for $500. She writes out a check drawn on Choice Bank, but later, believing that Auto Repair did not fix the car properly, issues a stop-payment order. -Refer to Fact Pattern 18-1.If Choice pays the check, the bank

Tomas writes a check for $1,000 drawn on Unified Bank and presents it to Viola. Viola presents the check for payment to Unified Bank, which dishonors it. The party most likely liable to Viola is​

Stored-value cards can be used to buy goods and services offered by the cards' issuer.

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's 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?

The rights and duties of a bank and its customer are contractual.

Smith & Jones P.A. is a business customer of Platinum Bank. Under federal law, Smith & Jones cannot demand​

Riley pays State Bank $500 plus a service fee to draw a check on itself payable to Torque Plumbing. The party that is responsible for paying the check is​

When a bank draws a check on itself, the check is called a certified check.

The Federal Reserve System acts as a clearinghouse where banks exchange checks.

Elmore pays First National Bank $1,000 plus a service fee to draw a check on itself made payable to Go Delivery Service. This is​

The Uniform Commercial Code regulates checks.

Financial institutions that exchange digital images of checks must also send the original paper checks.

Commercial banking practices consider a check that has been outstanding for three months to be a stale check.

A substitute check is a paper reproduction of an original check without all of the information required on checks for automated processing.

Marta has a checking account with Neighbors Bank. Marta signs a check "payable to Olive" drawn on Marta's account. Neighbors Bank is​

Fact Pattern 18-1 Kelly takes her car to Auto Repair Service, which repairs the car and bills Kelly for $500. She writes out a check drawn on Choice Bank, but later, believing that Auto Repair did not fix the car properly, issues a stop-payment order. -Refer to Fact Pattern 18-1.Choice​

Maya uses e-money consisting of funds stored on microchips in her laptop, phone, and tablet to pay bills. E-money is replacing physical cash with virtual cash in the form of​

Ken presents an instrument that states "pay to the order of Laura" to MegaBank for payment. This instrument is the most common type of negotiable instrument, which is​

Daisy signs a check "pay to the order of Ewan" drawn on Daisy's account in Finance Bank. Graham forges Ewan's indorsement. Finance Bank pays the check. Most likely​

A written stop payment order is only valid for thirty days.