BUSL Cengage CH 28-29

Gillis writes a check to Harley as payment for a game player but soon discovers it is broken. Gillis goes to the drawee bank and orally authorizes Ilene, a bank officer, to stop payment on the check. This order is valid for

14 days

Brie, Cam, and Dei are co-sureties of Edie's debt to Finance LLC. Brie pays the entire debt. Her right of contribution entitles her to recover any amount paid above the surety's obligation from

Cam and Dei.

Kobe signs a check "pay to the order of Liu" drawn on Kobe's account at Main Street Bank. He later orders the bank not to pay the check, but the bank pays it over his order. Subsequent checks written on the account "bounce." Most likely liable for the costs to Kobe is

Main Street Bank

Quito writes a check to Roy on Quito's account at Sterling Bank. The bank dishonors the check because Quito has insufficient funds in his account. The bank is liable to

Quito

Riley signs a check "pay to the order of State University" drawn on his account at Town Bank to pay tuition and fees. Like most checks, this check is

a special type of draft

Ridge Bank creates a paper reproduction of customer Sophie's check with the statement "This is a legal copy of your check. You can use it in the same way you would use the original check." This is

a substitute check

o make a sale to Gourmet Inc., Hill Valley Commodities asks Gourmet's outside accountant Ingre to co-sign a credit application. According to the terms, if Gourmet defaults, Hill Valley can look to Ingre for payment without first pursuing legal remedies against Gourmet. Ingre is

a surety

Building Company adds a shipping dock to the property of Corporate Complex, but the owner does not pay. Building files a lien on Corporate's property. The property

a. can be held to guarantee payment of the debt.

Kari is a surety for Lore's loan from Metro Bank. As a surety, Kari's right of reimbursement entitles her to receive from the debtor

all outlays made on behalf of the suretyship arrangement.

Allys writes a check to Beri on Allys' account at Community Bank. The bank dishonors the check even though Allys has sufficient funds in her account. The bank is liable to

allys

To buy a condo, Mary obtains a thirty-year mortgage with an interest rate that is fixed for three years and then adjusts annually. Mary's mortgage is

an adjustable-rate mortgage

Personal property that is most often exempt from satisfaction of a creditor's judgment debt on a debtor's default, up to a specified amount, includes

equipment used in a business or trade, such as tools. certain classified animals, usually including livestock. a vehicle for transportation

A fixed-rate mortgage is a standard mortgage with an adjustable rate of interest.

false

A paper check must be presented for payment—it cannot be retained at its place of deposit, with only its image or description presented electronically.

false

Because a mortgage involves a transfer of real property, it need not be in writing.

false

Electronic banking has reduced the number of possibilities for tampering with a person's private banking information.

false

Generally, any defenses available to a principal debtor cannot be used by a surety or guarantor to avoid liability on the obligation to the creditor.

false

Mortgage insurance compensates a debtor for losses due to a default on a mortgage loan.

false

Most liens have little practical use, because liens generally do not take priority over other claims to the same property.

false

Today, there is no significant difference in the liability of a surety and a guarantor in any state at common law or otherwise.

false

When a co-surety pays more than his or her proportionate share on a debtor's default, he or she is entitled to recover from the debtor the excess amount paid.

false

When a customer makes a deposit into a checking account, the customer becomes a debtor, and the bank a creditor, for the amount deposited.

false

With a joint checking account, the bank can hold any joint-account owner liable for payment of an overdraft even if that owner did not sign the check or benefit from its proceeds.

false

Equipment Company holds a lien on Fertile Farm's equipment. The equipment can be sold to satisfy the debt

if, before the sale, notice is given to Fertile Farm.

Because a mortgage conveys an interest in property to the lender, to protect the lender's investment, the mortgage typically requires the borrower to

maintain the property

To purchase a house, Elma obtains a mortgage loan from Fidelity Bank. Later, Elma is unable to make payments on the loan. Meanwhile, the market value of the house has declined. Fidelity agrees to a sale of the property for less than the amount due on the loan. This is

short sale

Dag signs a check "pay to the order of Eton" drawn on Dag's account at First Bank and dates the check "May 1." Eton presents the check to the bank for payment on December 15. This is

stale check

When processing a check, Platinum Bank encodes information, such as the amount of the check, on the item. Platinum thereby warrants to any subsequent bank or payor

the encoded information is correct

Petro Refinery asks Quality Bank for a loan to increase its inventory. Quality requires Roma, Petro's president, to sign a personal guaranty to pay the debt if Petro defaults. The guaranty is required to be in writing because

the main purpose rule does not apply.

To purchase a farmhouse, Clay obtains a mortgage loan from Debit Bank. Clay defaults on the payments on the loan. The bank has

the right to foreclose on the mortgaged property.

A bank may contractually shift to its customer the risk of forged checks created electronically or otherwise by the use non-manual signatures.

true

A lender can require a borrower to maintain the property in such a way that the lender's investment is protected.

true

Any loan for which repayment is ensured by collateral pledged by the borrower is a secured transaction.

true

Because issuing banks must honor cashier's checks when they are presented for payment, businesses sometimes use them as nearly the equivalent of cash.

true

Checks received after a certain time can be deferred for posting until the next banking day.

true

Federal law provides a minimal framework to protect debtors from losing all their income in order to pay judgment debts

true

Fewer records are available with electronic banking to prove or disprove that a transaction occurred.

true

If any part of a commercial electronic fund transfer is covered by the Electronic Fund Transfer Act, the entire transaction is excluded from UCC Article 4A.

true

In a few states, if a judgment debtor does not have a family, a creditor may be entitled to collect the full amount realized from the sale of the debtor's home.

true

Recording a mortgage ensures that the creditor is officially on record as holding an interest in the property.

true

The contractual rights and duties of the bank and the customer depend on the nature of the transaction.

true

The destruction of an original check after the creation of a substitute check prevents the check from being paid twice.

true

The purpose of a homestead exemption is to ensure that a debtor will retain some form of shelter.

true

When a bank certifies a check, the bank is agreeing in advance to accept the check when it is presented for payment and to make payment with funds reserved for the purpose.

true

When a bank draws a check on itself, the check is a negotiable instrument at the moment it is issued.

true

Business Inc.'s debt to Cartage Company is past due. Cartage brings a legal action against Business to collect. To ensure that a judgment in the creditor's favor will be collectible, Cartage asks the court to order the seizure of the debtor's property. This is a request for

writ of attachment