Exam 27: Bank Deposits, Collections, and Funds Transfers

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

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.

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

Lane Co.instructs its bank,Second Street Bank,to pay $200,000 to Moffett,Inc.,also a customer of Second Street Bank.The bank executes the payment order by crediting Moffett's account with the $200,000 and notifying Moffett that the credit was made and is available.In this case:

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

Match each statement with the correct term below. -promissory note

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

If a bank pays on a check even though it has a "stop payment order," the bank is liable to the customer only if the customer can prove a loss because of the payment.

An oral stop payment order is binding on the drawee bank for 14 calendar days.

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.

Match each statement with the correct term below. -payment order

Match each statement with the correct term below. -certification

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.

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

Match each statement with the correct term below. -presentment

A payor bank is under no obligation to its customer to pay an uncertified check that is more than six months old.

Goble,the seller,obtains authority from Meigs,the buyer,to debit Meigs's account after Goble ships the goods.Article 4A covers this transaction.

A bank is permitted by statute to remove an original paper check from the check collection process and send a substitute check instead.

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

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.