Business Law Ch 19

390 Words2 Pages
BMGT381 15 May 2011 Ch. 19 Self Study 1. What is a check? A check is a draft drawn by a drawer ordering the drawee bank or financial institution to pay a fixed amount of money to the holder on demand. 2. What are the primary ways in which commercial banks serve their customers? The primary ways are the creditor-debtor relationship, the agency relationship and the contractual relationship. 3. What is an overdraft? An overdraft is a check that is paid by the bank when the checking account on which the check is written contains insufficient funds to cover the check. 4. When does a check become stale under the UCC? Banks are not obligated to pay an uncertified check presented more than six months from its date. 5. How long after the death of a customer may a bank pay or certify checks? The death of a customer does not revoke the check, the bank needs to be notified of the situation and has had a reasonable amount of time to act on the notice. 6. Who has the right to order that payment on a check be stopped? Only the customer or a person authorized to draw on the account can order the bank not to pay the check. 7. Who is liable when a customer’s bank pays an altered check? If the customer can prove that the check was altered then the bank is liable for the payment. Even if the customer is at fault or negligent the bank can be liable for some of the loss if they failed to exercise ordinary care. 8. What role does the Federal Reserve System play in clearing checks? They act as a clearinghouse, a system or a place where banks exchange checks and drafts drawn on each other and settle daily balances. 9. What types of financial institutions are covered by the EFTA? They cover financial institutions that offer electronic fund transfers involving consumer accounts. 10. What types of commercial electronic fund transfers

More about Business Law Ch 19

Open Document