Exam 28: Bank Deposits, Collections, and Funds Transfers

The Code imposes certain affirmative duties on bank customers and fixes time limits within which they must assert their rights.

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

On April 6, Ellen sends a check out to a magazine publisher and then discovers she has already paid for the subscription.She calls her bank and orders that the bank not make payment.That order will be good until:

MATCHING Part V Matching Match each statement with the correct term below.a.An order to pay a fixed sum of money, signed by a drawer, payable on demand or at a definite time.b.A specialized form of draft; an order to pay money drawn on a bank and payable on demand.c.Legal concept that makes written instruments freely transferable and therefore a readily accepted substitute for money.d.An instrument that is payable to the possessor; a check that is made payable to cash or that is indorsed in blank.e.A person who is in possession of an instrument drawn, issued, or indorsed to him or to his order, or to bearer or in blank.f.An indorsement that specifies no indorsee and may consist of merely the signature of the indorser or her authorized agent.g.Issuer of a promissory note or CD.h.A written acknowledgement by a bank of the receipt of money that it promises to repay; a specialized form of promise to pay money that is given by a bank.i.A person or organization to whom a draft is directed and who is ordered to pay the amount of money specified therein; the bank on which a check is drawn.j.Issuer of a check or draft; the person on whose account a draft is drawn.k.An indorsement that attempts to limit the rights of the indorsee in some fashion.l.Signature that identifies an indorsee to be paid; makes the instrument order paper.m.The person to receive payment by an instrument..n.Defenses to liability on a negotiable instrument which are good against holders unless they are holders in due course.o.An instrument involving two parties, one of whom promises to pay the second a stated sum of money either on demand or at a stated future date.p.Person who signs an instrument to lend her credit to another party to the instrument.q.The transferee of an instrument acquires the same rights in the instrument as the transferor had.r.Acceptance of a check by a bank.s.Drawee which agrees to become primarily liable on a draft.t.An instrument that requires both transfer of its possession and indorsement by the appropriate parties for the transferee to become a holder.u.Defenses good against all holders, including holders in due course. -promissory note

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.

A depositary bank is any bank handling an item for payment.

Doug takes a $500 check drawn by Gail to Gail's drawee bank to cash it.Gail has over $10,000 on deposit in her account, but her bank refuses to pay Doug.In this situation:

MATCHING Part V Matching Match each statement with the correct term below.a.An order to pay a fixed sum of money, signed by a drawer, payable on demand or at a definite time.b.A specialized form of draft; an order to pay money drawn on a bank and payable on demand.c.Legal concept that makes written instruments freely transferable and therefore a readily accepted substitute for money.d.An instrument that is payable to the possessor; a check that is made payable to cash or that is indorsed in blank.e.A person who is in possession of an instrument drawn, issued, or indorsed to him or to his order, or to bearer or in blank.f.An indorsement that specifies no indorsee and may consist of merely the signature of the indorser or her authorized agent.g.Issuer of a promissory note or CD.h.A written acknowledgement by a bank of the receipt of money that it promises to repay; a specialized form of promise to pay money that is given by a bank.i.A person or organization to whom a draft is directed and who is ordered to pay the amount of money specified therein; the bank on which a check is drawn.j.Issuer of a check or draft; the person on whose account a draft is drawn.k.An indorsement that attempts to limit the rights of the indorsee in some fashion.l.Signature that identifies an indorsee to be paid; makes the instrument order paper.m.The person to receive payment by an instrument..n.Defenses to liability on a negotiable instrument which are good against holders unless they are holders in due course.o.An instrument involving two parties, one of whom promises to pay the second a stated sum of money either on demand or at a stated future date.p.Person who signs an instrument to lend her credit to another party to the instrument.q.The transferee of an instrument acquires the same rights in the instrument as the transferor had.r.Acceptance of a check by a bank.s.Drawee which agrees to become primarily liable on a draft.t.An instrument that requires both transfer of its possession and indorsement by the appropriate parties for the transferee to become a holder.u.Defenses good against all holders, including holders in due course. -check

Congress enacted the Truth in Savings Act, which requires all depositary banks to disclose in great detail to consumers the terms and conditions of their deposit accounts.

MATCHING Part V Matching Match each statement with the correct term below.a.An order to pay a fixed sum of money, signed by a drawer, payable on demand or at a definite time.b.A specialized form of draft; an order to pay money drawn on a bank and payable on demand.c.Legal concept that makes written instruments freely transferable and therefore a readily accepted substitute for money.d.An instrument that is payable to the possessor; a check that is made payable to cash or that is indorsed in blank.e.A person who is in possession of an instrument drawn, issued, or indorsed to him or to his order, or to bearer or in blank.f.An indorsement that specifies no indorsee and may consist of merely the signature of the indorser or her authorized agent.g.Issuer of a promissory note or CD.h.A written acknowledgement by a bank of the receipt of money that it promises to repay; a specialized form of promise to pay money that is given by a bank.i.A person or organization to whom a draft is directed and who is ordered to pay the amount of money specified therein; the bank on which a check is drawn.j.Issuer of a check or draft; the person on whose account a draft is drawn.k.An indorsement that attempts to limit the rights of the indorsee in some fashion.l.Signature that identifies an indorsee to be paid; makes the instrument order paper.m.The person to receive payment by an instrument..n.Defenses to liability on a negotiable instrument which are good against holders unless they are holders in due course.o.An instrument involving two parties, one of whom promises to pay the second a stated sum of money either on demand or at a stated future date.p.Person who signs an instrument to lend her credit to another party to the instrument.q.The transferee of an instrument acquires the same rights in the instrument as the transferor had.r.Acceptance of a check by a bank.s.Drawee which agrees to become primarily liable on a draft.t.An instrument that requires both transfer of its possession and indorsement by the appropriate parties for the transferee to become a holder.u.Defenses good against all holders, including holders in due course. -restrictive indorsement

A written stop payment order is effective indefinitely.

MATCHING Part V Matching Match each statement with the correct term below.a.An order to pay a fixed sum of money, signed by a drawer, payable on demand or at a definite time.b.A specialized form of draft; an order to pay money drawn on a bank and payable on demand.c.Legal concept that makes written instruments freely transferable and therefore a readily accepted substitute for money.d.An instrument that is payable to the possessor; a check that is made payable to cash or that is indorsed in blank.e.A person who is in possession of an instrument drawn, issued, or indorsed to him or to his order, or to bearer or in blank.f.An indorsement that specifies no indorsee and may consist of merely the signature of the indorser or her authorized agent.g.Issuer of a promissory note or CD.h.A written acknowledgement by a bank of the receipt of money that it promises to repay; a specialized form of promise to pay money that is given by a bank.i.A person or organization to whom a draft is directed and who is ordered to pay the amount of money specified therein; the bank on which a check is drawn.j.Issuer of a check or draft; the person on whose account a draft is drawn.k.An indorsement that attempts to limit the rights of the indorsee in some fashion.l.Signature that identifies an indorsee to be paid; makes the instrument order paper.m.The person to receive payment by an instrument..n.Defenses to liability on a negotiable instrument which are good against holders unless they are holders in due course.o.An instrument involving two parties, one of whom promises to pay the second a stated sum of money either on demand or at a stated future date.p.Person who signs an instrument to lend her credit to another party to the instrument.q.The transferee of an instrument acquires the same rights in the instrument as the transferor had.r.Acceptance of a check by a bank.s.Drawee which agrees to become primarily liable on a draft.t.An instrument that requires both transfer of its possession and indorsement by the appropriate parties for the transferee to become a holder.u.Defenses good against all holders, including holders in due course. -acceptor

MATCHING Part V Matching Match each statement with the correct term below.a.An order to pay a fixed sum of money, signed by a drawer, payable on demand or at a definite time.b.A specialized form of draft; an order to pay money drawn on a bank and payable on demand.c.Legal concept that makes written instruments freely transferable and therefore a readily accepted substitute for money.d.An instrument that is payable to the possessor; a check that is made payable to cash or that is indorsed in blank.e.A person who is in possession of an instrument drawn, issued, or indorsed to him or to his order, or to bearer or in blank.f.An indorsement that specifies no indorsee and may consist of merely the signature of the indorser or her authorized agent.g.Issuer of a promissory note or CD.h.A written acknowledgement by a bank of the receipt of money that it promises to repay; a specialized form of promise to pay money that is given by a bank.i.A person or organization to whom a draft is directed and who is ordered to pay the amount of money specified therein; the bank on which a check is drawn.j.Issuer of a check or draft; the person on whose account a draft is drawn.k.An indorsement that attempts to limit the rights of the indorsee in some fashion.l.Signature that identifies an indorsee to be paid; makes the instrument order paper.m.The person to receive payment by an instrument..n.Defenses to liability on a negotiable instrument which are good against holders unless they are holders in due course.o.An instrument involving two parties, one of whom promises to pay the second a stated sum of money either on demand or at a stated future date.p.Person who signs an instrument to lend her credit to another party to the instrument.q.The transferee of an instrument acquires the same rights in the instrument as the transferor had.r.Acceptance of a check by a bank.s.Drawee which agrees to become primarily liable on a draft.t.An instrument that requires both transfer of its possession and indorsement by the appropriate parties for the transferee to become a holder.u.Defenses good against all holders, including holders in due course. -draft

Which of the following is true of a collecting bank?

ABC Bank sent Joanne, a depositor, her January statement on January 31.Within what length of time after this date will Joanne have to notify ABC bank of any instruments containing alterations or unauthorized signatures included in her January statement?

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

MATCHING Part V Matching Match each statement with the correct term below.a.An order to pay a fixed sum of money, signed by a drawer, payable on demand or at a definite time.b.A specialized form of draft; an order to pay money drawn on a bank and payable on demand.c.Legal concept that makes written instruments freely transferable and therefore a readily accepted substitute for money.d.An instrument that is payable to the possessor; a check that is made payable to cash or that is indorsed in blank.e.A person who is in possession of an instrument drawn, issued, or indorsed to him or to his order, or to bearer or in blank.f.An indorsement that specifies no indorsee and may consist of merely the signature of the indorser or her authorized agent.g.Issuer of a promissory note or CD.h.A written acknowledgement by a bank of the receipt of money that it promises to repay; a specialized form of promise to pay money that is given by a bank.i.A person or organization to whom a draft is directed and who is ordered to pay the amount of money specified therein; the bank on which a check is drawn.j.Issuer of a check or draft; the person on whose account a draft is drawn.k.An indorsement that attempts to limit the rights of the indorsee in some fashion.l.Signature that identifies an indorsee to be paid; makes the instrument order paper.m.The person to receive payment by an instrument..n.Defenses to liability on a negotiable instrument which are good against holders unless they are holders in due course.o.An instrument involving two parties, one of whom promises to pay the second a stated sum of money either on demand or at a stated future date.p.Person who signs an instrument to lend her credit to another party to the instrument.q.The transferee of an instrument acquires the same rights in the instrument as the transferor had.r.Acceptance of a check by a bank.s.Drawee which agrees to become primarily liable on a draft.t.An instrument that requires both transfer of its possession and indorsement by the appropriate parties for the transferee to become a holder.u.Defenses good against all holders, including holders in due course. -payee

When a person deposits a check in his bank, the bank credits the individual's account by the amount of the check.

The relationship between the payor bank and its checking account customer is exclusively governed by statute and leaves no room for contractual modifications.

MATCHING Part V Matching Match each statement with the correct term below.a.An order to pay a fixed sum of money, signed by a drawer, payable on demand or at a definite time.b.A specialized form of draft; an order to pay money drawn on a bank and payable on demand.c.Legal concept that makes written instruments freely transferable and therefore a readily accepted substitute for money.d.An instrument that is payable to the possessor; a check that is made payable to cash or that is indorsed in blank.e.A person who is in possession of an instrument drawn, issued, or indorsed to him or to his order, or to bearer or in blank.f.An indorsement that specifies no indorsee and may consist of merely the signature of the indorser or her authorized agent.g.Issuer of a promissory note or CD.h.A written acknowledgement by a bank of the receipt of money that it promises to repay; a specialized form of promise to pay money that is given by a bank.i.A person or organization to whom a draft is directed and who is ordered to pay the amount of money specified therein; the bank on which a check is drawn.j.Issuer of a check or draft; the person on whose account a draft is drawn.k.An indorsement that attempts to limit the rights of the indorsee in some fashion.l.Signature that identifies an indorsee to be paid; makes the instrument order paper.m.The person to receive payment by an instrument..n.Defenses to liability on a negotiable instrument which are good against holders unless they are holders in due course.o.An instrument involving two parties, one of whom promises to pay the second a stated sum of money either on demand or at a stated future date.p.Person who signs an instrument to lend her credit to another party to the instrument.q.The transferee of an instrument acquires the same rights in the instrument as the transferor had.r.Acceptance of a check by a bank.s.Drawee which agrees to become primarily liable on a draft.t.An instrument that requires both transfer of its possession and indorsement by the appropriate parties for the transferee to become a holder.u.Defenses good against all holders, including holders in due course. -special indorsement