blaw 444 chapter 28

availability schedule for deposited checks EFAA & regulation CC

1. any local check (bank are same area) deposit must be avialble for withdrawel by check as cash within 1 business day from the date of deposit 2. for nonlocal check, the fund must be available for withdrawel within not more than 5 business days 3. under check 21, bank must credit customer's acct as soon as bank receives the fund 4. cash deposit, write transfers and gove check, fund must be aviable on the next business day 5. the first 100 on any deposit must be avialble for cash withdrawel on the opening of the next business day after deposit if the bank is place a longer holder on deposit of a check must notify customer other rule: 1. 5 day hold is permitted on all deposits made on/at nonproprietary ATM (ATM the bank don't own) 2. bank institution has 8 days to make fund available in new account that are open less than 30 days

interest- bearing account bank's monthly statement

1. interest earned on acct 2. any fee were charge 3. how fee is calculated 4. number of day the statement is covered

interest- bearing account new customer's duty

1. minimum balance require to open an acct and to be paid interest 2. interest, stated annual % yeild 3. how the interest is calucated 4. any fee, charge and penalties and how they are calculated

solution: bank will give monthly statement, customer duty

1. promptly examine bank statement with reasonable care 2. report any alterations/ forged signatured 3. report any alterations/ apparent forgery in signature of indorsers customer who fail their duty and bank suffer the loss --> customer will be liable for the bank loss

agency relationship

1. writes a check on his/her account bank had the responsibility to honor the customer request when the holder/payor present with the check to pay out the amount 2. deposits a check in to his/ her account bank has obligation to collect payment on the check from the drawer.

role of federal reserve system

12 central bank network it acts as clearing hour --> a system /place when bank exchange check and draft drawn each other and settle daily balance

consumer fund transfers

EFTA provide rights, liabilities, and responsibilities of user of EFT system regulation E--> protect user of electronic fund transfer systems acct that protect by EFTA: 1. checking acct 2. saving acct 3. any other assets accounts established for personal, family or householder purpose

consumer fund transfer disclosure requirement

EFTA requirement: 1. bank must provide monthly statement - amount and date of the transfer - names of the retailer or other third parties involved - location or identification of the terminal - the fees 2. bank must make receipts available for transaction made through computer terminals 3. if customer's debit care is lost / stolen and use without her/ his permission the customer will be require to pay no more than $50 -customer not notify bank of loss or theft within 2 days of learning about it, customer liabilitiy will be increase to 500 - customer not notify bank of the unauthorizedd use within 6 days after appear on her/his statement customer may be liable for more than 500 4. the customer must discover any error on the monthly statement within 6 days and notify the bank -bank has 10 day to investigate and must report its conclusions to the customer in writing - if the bank take longer than 10 days, it must return the disputed amount to customer acct until it find the error -if there is no error, the customer is required to return the fund to the bank

stop- payment order

a customer order to the give the bank to stop the check payment (pay/certify a certain check) only customers/ authorized to draw the account can order the bank the customer has no right to stop the payment that already been certified/ accepted by the bank person wrongful stop the payment are liable to the payee/holder for the amount on the check customer/drawer must have legal ground for issuing a stop-payment order else the holder can use it to against the customer for the payment

incompetence/ death of a customer

a customer's mental incompetence/ death doesn't automatically revoke a bank's authority to accept, pay or collect an item only after the bank is notified and has reasonable time to act on the notice then the bank authority is ineffective but sometime even when the bank know the death, for ten day after the date of death, bank can still pay/ certify check drawn on / before the date of death

Altered check

bank had implict duty to examine check before make final payment fail--> bank ned to pay customer difference between actual paid and original amount in the check

the bank's duty to accpet deposits

bank has duty to accpetd customer's deposit of cash and check check--> bank must make fund available with certain time frames bank also has duty to collect payment on any check payable to its customer and deposited into customer' acct cash in US currency are received into customer's acct without being subject to further collection procedures

Checks Bearing Forged Indorsements

bank is liable to recredit customer's check when there is bearing a forged indorsement customer had liable to report the forged to the indorsemnt bank is not liable when customer fail to report forged indorsement after 3 year limited start when the bank statement that contained forged items

postdate check

bank may charge a fee for this type of check into customer's acct, expect customer notify the bank (in time manner) not to pay the check until the stated date bank usual ignored the date and treat them as demand instrument expect customer give a notify the notice must given in time allow the bank to act on the notice before commiting the bank to pay on the check if bank fail to act the customer's notify and already pay the holder before postdate are liable for any damage that customer incurred.

customer negligence

bank not be obligated to recredit the customer's acct for the amount of the check customer liability will be reduced because bank is negligence

bank liability for wrongful payment

bank pay the check that are stop-payment order --> liable, has obligated to recredit the customer's account bank also liable if bank pay the stop-payment cause customers' other check are being "bounce" not enough money to pay the other check, bank is liable to any other expense incurred in customer account

overdraft

bank received an item properly payable from the customer check accounting but account don't have enough money to pay the holder/payee bank can: 1. dishonor the item 2. pay the item and charge a fee to customer acct --> overdraft bank can subtract the difference plus the service charge from the customer next deposit, due the check is enforceable implied promised to reimburse the bank for joint acct, bank can't hold joint acct liable for the payment of the overdraft, expect customer sign or have benefit from this proceeds. there is overdraft protection agreement that the bank can use this from customer to accept overdraft, but it there is any failure of the bank of honor the check due to it would create overdraft and breach the agreement --> this is a wrongful dishonor

Bank's duty to honor check

bank who provide checking services --> it agree to honor the check that written by the customer with usual set/ stipulation sufficient fund that is available in the account if the bank fail to honor the check are liable customer's damage resulting from its refusal to pay --> customer don't need to prove the bank is breach the contractual commitment was negligent

Cashier's check

check drawn by the bank itself. bank serves both as drawer and drawee at the same time it normally has identifies a specific payee bank is responsibility for this check, it more readily accepted as substitute for cash bank must honor this type of check, when they presented for payment bank wrongful honor check's the holder can recover, all expenses incurred, interest, and consequential damages

Bank and customer relationship

creditor-debtor relationship agency relationship contractual relationship

creditor - debtor relationship

customer (creditor) deposit the cash to the bank (debtor) who is liable to put the money into customer's checking accounts.

if there are series of check from same wrongdoer forges, the customer must

discover and report the first forged check to the bank within 30 calendar days of the receipt/ availability of the bank statement --> in order to recover all the forged items failure to report --> bank is not liable for any loss customer can only get away when they can prove bank is negligent (fail to exercise ordinary care) then the loss will be allocated between the bank and customer basis of the comparative negligence UCC--> 1 year limitation when the start on bank statement available to inspection

electronic check presentment

done on the day of the deposit bank that encides information for the electronic presentment warrants to any subsequent bank or payor bank that the encoded information is correct after encoding a check, a bank may retain it and present only its image/ decrepit for payment under an electronic presentment agreement

Altered check customer negligence

ex: not using all the space the loss will be the customer expect bank is negligent too bank must observe reasonable commercial standards of care in paying on a customer's check customer negligence is base on if the bank doing their ordinary care

digital cash

funds contained on computer software, in the form of secure programs stored on microships and other computer devices

Forged Drawer's signature

general rule: bank suffers the loss expect: bank can get a partial recovery 1. from customer, if the customer negligence substantially contributed to the forgery 2. from forger of the check , if the forger can be found 3. from the holder who presented the check for the payment, the holder had the knowledge about this check is forged customer are not liable to this only if the person make forged signature are liable most of time bank will require a signature card when customer open an acct, but only check them when the amount is over 2,500 (cause is expensive)

Certified check

has been accepted by bank on which it drawn bank make a promise to pay the back when check is presented bank usually will write/stamp the word "certified" on the face of the check & indicates what amount will pay once the check is certified, the drawer and prior indorser are completely discharged from liability on the check--> only bank hold responsibility to pay the amount on the check/ instrument the bank not require to certify a check --> it don't show dishonor

banking day

is any part of a day on which bank open to carry on substantially all of its baking functions UCC permit the bank can closed all the transaction after 2pm. which any transaction after 2pm should be show the transaction in the acct next banking day bank are liable for face of amount on the check (when the check reach to the payor bank) expect payor bank dishonor it

faster access to fund s

mean acct holder will be: 1. faster access to their deposited fund 2. less float time (time between check is written and when amount reduce from acct)

check

most common type of negotiable instruments regulated by UCC drawer order drawee(bank) to pay certain amount of money to the holder on demand

reasonable time and manner

must issue within reasonable time and reasonable manner to permit the bank to act it can be either be oral or written oral -->binding on bank only for 4 calendar days written --> effective 6 month and must renewed in written after it pass

customer duty for the bank to honor check

need to be sure the account has sufficient fund in the account for all the written check. customer will be liable to the holder/payee of the written check in civil suit, if the check is dishonor because insufficient fund in the account bank will not liable to customer when the bank properly dishonor a check due to insufficient fund

substituted check

negotiable instrument paper reproudction of front and back of an original check and contain all the same information required on check for automated processing bank create it from digital images of orignial cheks it can process the check info electronically deliver substitute check to bank that wish to continue receiving paper checks orginial check can be destroyed after the substitied check is created, it helping to prevent the check from being paid twice and reduce expense

stale check

other than certified check, it is presented more six month later them its date bank has no obligation to pay a uncertified check that are present in the bank that are past more 6 month later on its date

traveler's check

pay on demand(check) issuing institution has directly obligation to accepted and pay this check according to the check term it is design to be a safe substitute for cash when person is on vacation/traveling each check is issued for a fix amount the purchaser requires two signatures, first at the time of purchase of the check, and the second signature is when the purchaser is using the check. most major bank purchases and issued American Express traveler's check for their customer

e-money

prepaid funds recorded on a computer or a card

traditional collection process

same bank --> customer pay the check to the payer who had the same bank as the customer which this is call on-us item bank will issued provisional credit for on- us item within same day if the bank don't dishonor the check, the check will be consider be paid on the second banking day

commercial fund transfers

the amount transferred electronically " by wire" between commercial parties far exceeds the dollar volume of payments made by other means wire payment example: federal reserve wire transfer network (Fedwire), New York clearing house interbank payment system (CHIPS) governed by article 4 of UCC

other parties from whom the bank may recover

the bank can recover the amount of loss and expense from transferor who presented the check for payment expect: 1. if bank also is drawer (cashier check), it can't recovery from presenting party if the party is HDC acting good faith 2. HDC who presented a certified check for payment in good faith doesn't warrant to check's certifier that check was unaltered before the HDC acquired it

contractual relationship

there will have created contractual rights and duties to both bank and customer side, depend on the transaction

EFT

transfer fund use an electronic terminal, telephone, computer or magnetic tape. law govern EFT depends on the type of transfer involved consumer fund--> governed by EFTA commerical fund --> governed by article 4A of UCC it poss some of difficulties on occasion: 1. it is difficulties to issue stop-payment order with electronic banking 2. fewer records are available to prove/ disprove that transaction is took place 3. it increase the possibilities for tampering with a person's private banking information

consumer fund transfer violation and damage

unauthorized access to an EFT system constitutes a federal felony and fined up $10,000 and sentenced as long as 10 years bank must strictly comply with teh term of EFTA and are liable for any failure to adhere to its provisions bank failure consumer may recover --> actual damage (attorney fees and costs), punitive damage of not less than $100 and not more $1000 failure to investagte an error in good faith makes the bank liable for treble damage --> customer has not atcual damage, the bank may be liable for legal cost and punitive damage if it fails to follow the procedures outlined by the EFTA for error resolution