Question 1

Describe the limitations on the bank's right or duty to charge the depositor's account for the check.

Accepted Answer

Article 4 of the Uniform Commercial Code recognizes that the bank's right or duty to pay a check or to charge the depositor's account for the check may be terminated,suspended,or modified by the depositor's order to stop payment.In addition,it may be stopped by events external to the relationship between the depositor and the bank.These external events include the filing of a bankruptcy petition by the depositor or by the depositor's creditors and the garnishment of the account by a creditor of the depositor.

Question 2

Eli draws a check for $1,500 on Town Bank.The check is made payable to the order of Carmen.Carmen endorses and sells the check to Nita.At Nita's request,Town Bank certifies the check.In this scenario,which of the following is a true statement?

Accepted Answer

A)   Carmen acquires secondary liability on the check.
B)   Eli acquires secondary liability on the check.
C)   Town Bank acquires primary liability on the check.
D)   Eli acquires primary liability on the check. C

Question 3

Sasha drew a check payable to the order of Janice on First Bank.Janice indorsed the check and sold it to Karl,who took the check to First Bank and requested that the bank certify the check.The bank did so.Later,Karl presented the check for payment,but First Bank refused to pay.In this scenario,which of the following parties may Karl sue for not receiving payment?

Accepted Answer

A)   First Bank
B)   Sasha
C)   Janice
D)   Sasha and Janice A

Question 4

If the drawer of a check orders the drawee bank not to pay the check,the drawee bank generally owes the drawer a duty not to certify the check.

Accepted Answer

A) True 
 B)False

Question 5

A cashier's check is same as a certified check.

Accepted Answer

A) True 
 B)False

Question 6

A check drawn by a credit union on its account at a bank is an example of a:

Accepted Answer

A)   personal check.
B)   teller's check.
C)   certified check.
D)   stale check.

Question 7

The Electronic Funds Transfer Act (EFTA)now addresses many of the issues that arise out of consumer use of EFT systems,while _____ of the Uniform Commercial Code deals with the funds transfers that are outside the overage of EFTA.

Accepted Answer

A)   Article 4A
B)   Regulation E
C)   Articles 3 and 4A
D)   Article 3

Question 8

Similar to the Fair Credit Billing Act,the Electronic Funds Transfer Act gives operators a maximum of 90 working days to investigate errors or provisionally recredit the consumer's account.

Accepted Answer

A) True 
 B)False

Question 9

On August 1,1990,Lisa wrote a check for $100 payable to the order of Marcia,her sister.Marcia misplaced the check and found it in May 1991,and attempted to cash it.Under these circumstances,_____.

Accepted Answer

A)   the bank must honor the check
B)   the bank cannot pay the check out of Lisa's account
C)   the bank may, in good faith, pay the check and charge it to Lisa's account
D)   the check is no longer valid because it is a stale check

Question 10

Even if the drawer is negligent and contributes to the alteration of a check,he cannot be barred from claiming it as the reason that a particular check should not be charged to his account.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following is true of the Check 21 Act?

Accepted Answer

A)   The processes it enabled are time-consuming and costly.
B)   It is designed to enable banks to handle more checks electronically.
C)   It completely discourages check truncation.
D)   It requires banks to retain a legible copy of checks for fifteen years.

Question 12

A person may stop payment on a check:

Accepted Answer

A)   as long as he or she is authorized to draw a check from the account in question.
B)   as long as he or she is authorized to draw a check from the account in question and he or she is the party who signed the check in question.
C)   as long as he or she has sufficient funds to cover any liability an erroneous stop-payment order would incur.
D)   after a month of the deposit of the check.

Question 13

Under revised Article 3 of the Uniform Commercial Code,when multiple forgeries are made by the same wrongdoer,the customer generally cannot hold the bank responsible for paying,in good faith,any such checks after an alteration was available to the customer for a reasonable period,not exceeding:

Accepted Answer

A)   10 working days.
B)   30 calendar days.
C)   60 calendar days.
D)   14 working days.

Question 14

Which of the following is an electronic funds transfer system?

Accepted Answer

A)   Paper checks
B)   Point-of-sale terminals
C)   Certified checks
D)   Mailing checks to the bank

Question 15

Will a drawee bank be liable to the drawer of the check while a stop-payment order is in effect? If yes,under what circumstances will the drawee bank be liable?

Accepted Answer

The answer of Will a drawee bank be liable to...

Question 16

A written stop-payment order:

Accepted Answer

A)   is valid for only 14 days and cannot be extended further even if written instructions are given to the bank by the customer.
B)   is valid for only three months unless confirmed in writing.
C)   is not valid for more than 48 hours.
D)   is valid for six months, and can be extended for another six months if written instructions are given by the customer.

Question 17

Shankar purchased a new car from Friendly Fred's Autos.Fred indorsed the check to Maya for value.Maya presented the check to the bank,and the bank cashed the check.Later,Shankar attempted to place a stop-payment order on the check,because the car he purchased from Fred was defective.Under these circumstances,_____.

Accepted Answer

A)   the bank is liable to Shankar for paying the amount of the check to Maya
B)   Shankar would not be able to have his account recredited
C)   Maya must return the funds to the bank
D)   Shankar can prove that he has sustained a loss

Question 18

If a drawee bank certifies a check,who among the following is discharged of their liability on the check?

Accepted Answer

A)   The drawer only
B)   The drawee bank and persons who previously indorsed the check
C)   The drawee bank
D)   The drawer and the persons who previously indorsed the check

Question 19

A drawee bank does not have the right to charge a payable check to a drawer's account if this will create an overdraft in the account.

Accepted Answer

A) True 
 B)False

Question 20

A bank is primarily liable on a cashier's check.

Accepted Answer

A) True 
 B)False

Exam 41: Checks and Electronic Fund Transfers-Part Eight Credit Transactions

Describe the limitations on the bank's right or duty to charge the depositor's account for the check.

Eli draws a check for $1,500 on Town Bank.The check is made payable to the order of Carmen.Carmen endorses and sells the check to Nita.At Nita's request,Town Bank certifies the check.In this scenario,which of the following is a true statement?

If the drawer of a check orders the drawee bank not to pay the check,the drawee bank generally owes the drawer a duty not to certify the check.

A cashier's check is same as a certified check.

A check drawn by a credit union on its account at a bank is an example of a:

The Electronic Funds Transfer Act (EFTA) now addresses many of the issues that arise out of consumer use of EFT systems,while _____ of the Uniform Commercial Code deals with the funds transfers that are outside the overage of EFTA.

Similar to the Fair Credit Billing Act,the Electronic Funds Transfer Act gives operators a maximum of 90 working days to investigate errors or provisionally recredit the consumer's account.

On August 1,1990,Lisa wrote a check for $100 payable to the order of Marcia,her sister.Marcia misplaced the check and found it in May 1991,and attempted to cash it.Under these circumstances,_____.

Even if the drawer is negligent and contributes to the alteration of a check,he cannot be barred from claiming it as the reason that a particular check should not be charged to his account.

Which of the following is true of the Check 21 Act?

A person may stop payment on a check:

Under revised Article 3 of the Uniform Commercial Code,when multiple forgeries are made by the same wrongdoer,the customer generally cannot hold the bank responsible for paying,in good faith,any such checks after an alteration was available to the customer for a reasonable period,not exceeding:

Which of the following is an electronic funds transfer system?

Will a drawee bank be liable to the drawer of the check while a stop-payment order is in effect? If yes,under what circumstances will the drawee bank be liable?

A written stop-payment order:

If a drawee bank certifies a check,who among the following is discharged of their liability on the check?

A drawee bank does not have the right to charge a payable check to a drawer's account if this will create an overdraft in the account.

A bank is primarily liable on a cashier's check.