Exam 28: Bank Deposits, Collections, and Funds Transfers

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. -negotiability

A check is drawn on Jones Bank by Tamara and made payable to the order of Chris.Chris indorses it "for deposit only, Acct.2275, Chris" and gives it to Plainer Bank for deposit.Plainer stamps "pay any bank" on the check along with its indorsement and negotiates it to Stone Bank.Stone Bank simply stamps "Stone Bank" and negotiates it to SmallTown Bank.If SmallTown wants to negotiate it to the electric company to pay its bill, can it?

The Check Clearing for the 21st Century Act requires banks to accept checks in electronic form.

Article 4 of the UCC, entitled "Bank Deposits and Collections" provides the principal rules governing bank collection practices.

An objective of the Check 21 Act is to:

David dies an untimely death in a boating accident two days after writing a check to his landlord.When the check is presented to his bank two weeks later, it refuses to pay.The landlord will have to file a claim in any probate proceedings if he wishes to collect on the check.

UCC Article 4A is designed to provide a statutory framework for electronic funds transfers by individual consumers.

The dollar volume of commercial payments made by checks or credit cards exceeds the dollar amount made by wire transfer.

Banks like electronic funds transfers, because they eliminate the float time that a drawer enjoys on a checking account and the paperwork involved in processing checks.

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.

Theresa has just started working for First 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.

A bank customer may encode its own checks, and if it does, the encoder warrants to any subsequent collecting bank and to the payor that information is properly encoded.

For how long is a written stop payment order valid?

If Ben Stewart has a checking account at First Bank:

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

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. -certificate of deposit

A preauthorized electronic transfer from a consumer's account:

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

UCC Article 4A:

If Margie makes out a check for $27.50 when she has only $10 in her account, her bank may: