Business Law II: Worksheet 24.1

When a customer opens a checking account and deposits funds, what three types of relationships are created? (select all that apply)

- Creditor-debtor - Agency - Contractual

Postdated check

A check delivered now but dated with a future date

Overdraft

A check written on a checking account in which here are insufficient funds

Stale check

A check, other than a certified check, that is presented for payment more than six months after its date

Stop-payment order

A request by a bank customer to the bank to not pay or certify a certain check

A person who signs a check and leaves the dollar amount blank for someone else to fill in is barred from protesting when the bank pays the shown amount in good faith.

True

Once a check is certified, the drawer and any prior endorsers are completely discharged from liability on the check.

True

Cashier's Check

a draft drawn by a bank on itself

Check

a draft drawn by a drawer ordering the drawee bank or financial institution to pay a certain amount of money to a holder on demand

Certified Check

a draft that had been accepted by the bank on which it is drawn, promising to pay the check when it is presented

Traveler's Check

a draft that is payable on demand, drawn on or payable through a bank, and specially designated

When a bank pays a check on which the drawer's signature is forged, generally the __________ suffers the loss. The general rule is that the bank must _________ the customer's account when it pays on a forged signature. But if the customer's negligence contributes substantially to the forgery, then the bank ______ have to recredit the account. The ________ has a duty to promptly examine bank statements with reasonable care and to report any forgery. If a customer does not report a forgery within ________ that customer loses the right to have the bank recredit the account. And to recover for all of a series of forgeries, the customer must discover the first forged check within ______ of the receipt of the bank statement.

bank recredit may not customer 1 year 30 days

With a __________, the bank serves both as the drawer and the drawee.

cashier's check

A bank may _______ a _______ check against a customer's account, unless the customer notifies the bank, in a timely manner, not to pay the check until the stated date.

charge postdated

In the following image of a check, Woodforest National Bank is the ________, William Murtaugh is the __________ and Cindy Leiteell is the ____________.

drawee payee drawer

A person who writes a check is called a _________. This person is a depositor in the bank on which the check is _________. The person to whom the check is payable is the __________. The bank or financial institution on which the check is drawn is called the _________.

drawer drawn payee drawee

A bank ________ continue to pay checks after the death or incompetence of a customer. Once a bank is _________ of the death or incapacity, then the bank _________ pay for up to _________.

may informed may 10 days

A customer has a duty to examine the account statement with ________ on receipt and to notify the ________ promptly of any unauthorized signatures or alterations. Failure to promptly report ________ the bank's liability unless the bank failed to exercise _________.

reasonable care bank will discharged reasonable care

If a bank pays on a check that has a forged indorsement on it:

the bank must recredit the customer's account but can recover from the bank that originally cashed the check.