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Exam 19: Checks and Banking in the Digital Age

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Question 21

Multiple Choice

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Fact Pattern 19-2 (Questions 27-29 apply) Tom draws a check, on his account in State Bank in New York, payable to Digital Media, Inc., in San Francisco. Digital deposits the check in its ac¬count at First National Bank. First National deposits the check in the Federal Reserve Bank of San Francisco, which transfers it to the Federal Reserve Bank of New York. That Federal Reserve Bank sends the check to State Bank. -Refer to Fact Pattern 19-2.When Digital's bank received the check,it was required to pass it on

A) before midnight of the next banking day.
B) before midnight of the next day, even if it was not a "banking" day.
C) before noon of the next banking day.
D) within five business days.

E) C) and D)
F) B) and D)

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Question 22

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Each bank in a collection chain must pass a check on before midnight of the day of its receipt.

A) True
B) False

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Question 23

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Paris knowingly divulges to Media Exposure magazine information about Randy's e-money payments to City Bank.The payments were in transmission to City Bank when Paris,without the consent of Randy or City Bank,discovered and revealed them.This may be a violation of

Fact Pattern 19-2 (Questions 27-29 apply) Tom draws a check, on his account in State Bank in New York, payable to Digital Media, Inc., in San Francisco. Digital deposits the check in its ac¬count at First National Bank. First National deposits the check in the Federal Reserve Bank of San Francisco, which transfers it to the Federal Reserve Bank of New York. That Federal Reserve Bank sends the check to State Bank. -Refer to Fact Pattern 19-2. Digital's bank is

Generally,a bank has no obligation to pay a customer's overdrafts.

Hoppy steals two checks from Eagle Retail Stores,Inc.: a blank check and a check payable to the order of General Supplies Company (GSC),drawn on Eagle's account with First National Bank.Hoppy forges Eagle's signature on the blank check and makes it payable to himself.Hoppy forges GSC's indorsement on the back of the check payable to GSC,and adds "Pay to the order of Hoppy." At Friendly Credit,Inc.,Hoppy indorses the back of both checks with his own name and gives them to Friendly for cash.Friendly does not know about the theft or the forged signatures and presents the checks to First National,which pays them.Eagle,which was not negligent,discovers the forgeries and asks First National to recredit its account.Who suffers the loss on each check?

Fact Pattern 19-2 (Questions 27-29 apply) Tom draws a check, on his account in State Bank in New York, payable to Digital Media, Inc., in San Francisco. Digital deposits the check in its ac¬count at First National Bank. First National deposits the check in the Federal Reserve Bank of San Francisco, which transfers it to the Federal Reserve Bank of New York. That Federal Reserve Bank sends the check to State Bank. -Refer to Fact Pattern 19-2.Tom's bank is

A bank has no right to charge a customer's account for the amount of a stale check.

Gaining unauthorized access to an electronic fund transfer system is a felony.

Trudy forges Uma's signature on a check "payable to the order of Trudy" drawn on Uma's account in Verity Bank.Most likely,if the bank pays the check

Certified checks are instruments that have been accepted for payment by the institutions on which they are drawn.

An oral stop payment order is valid for thirty days.

Fact Pattern 19-1 (Questions 15 and 16 apply) Echo takes her car to Fix-It, Inc., which repairs the car and bills Echo for $500. Echo writes out a check drawn on Capital Bank, but later, believing that Fix-It did not repair the car properly, issues a stop-payment order. -Refer to Fact Pattern 19-1.Capital Bank

Kip writes a check for $1,000 drawn on Local Bank and presents it to Mira.Mira presents the check for payment to Local Bank,which dishonors it.The party most likely liable to Mira is

UCC Articles 3 and 4 govern checks.

Steve steals one of Tricia's checks and forges her signature.Tricia's bank,Unity Bank,pays the check.Tricia can recover from

A bank is obligated to pay an uncertified check presented less than six months from its date.

Pat,the manager of Quik Mart,deposits the store's receipts in its account at Regional Bank.As to the receipts,the relationship between Quik Mart and the bank is

Elmo 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 bank on which a check is drawn is the payor bank.