Allocation of Loss in Commercial Payments - Module 5 of 6


Question 1

James writes a check on his account at First Bank. First Bank is the

Question 2

Larry steals a check from Belinda and forges her signature as a drawer of the check. He then deposits the check in his checking account at First Bank, here the depository bank. First Bank presents the check to Second Bank which, operating here as the payor bank, pays the check from Belinda’s account. Can the payor bank can assert a claim against the depository bank based on the presentment warranty?

Question 3

Ralph pays Gertrude for roof repair work on his house with a check drawn on his account at First Bank. The amount is for $100. Gertrude indorses the check to Kyle who then adds a ‘0’ to the amount and manipulates the text to read “thousand” instead of “hundred.” Kyle then deposits the altered check into his account at Second Bank. First Bank presents the check to Second Bank for payment. Which of the following is true?

Question 4

Ralph pays Gertrude for roof repair work on his house with a check drawn on his account at First Bank. The amount is for $100. Gertrude indorses the check to Kyle who then adds a ‘0’ to the amount and manipulates the text to read “thousand” instead of “hundred.” Kyle then deposits the altered check into his account at Second Bank. First Bank presents the check to Second Bank for payment. Second Bank’s liability would be

Question 5

Ryan works as an accounts payable clerk for Acme Corporation (Acme) which manufactures and sells anvils and fireworks. It is part of his customary and regular duties to issue and sign company checks in order to pay Acme’s suppliers. In order to pay some gambling debts, Ryan issues several checks to himself and deposits them in his own bank account. Under the Code, who besides Ryan bears the loss to Acme for Ryan’s actions?

Question 6

Arlen goes to his bank to cash a check indorsed over to him in the name of “Homer Simpson” as payee. The teller refuses to cash the check. Which of the following facts, if proven, would most assist Arlen in a claim against the bank?

Question 7

A telecheck is a check

Question 8

Susan notices a check on her bank statement that she did not authorize. She does nothing. Four months later she notices three more checks she did not authorize. Can she require the bank to recredit her account?

Question 9

The statute of limitations for claims made under Articles 3 and 4 under the Uniform Commercial Code is ___ years.

Question 10

Conversion is a theft claim that