The Check Collection Process - Module 3 of 6

Question 1

The entity upon which a check is drawn (and hosts the account of the drawer) is typically called the

drawer bank.

“paying bank” under the Uniform Commercial Code.

“payor bank” under Regulation CC.

none of the above.

Question 2

A check presented for payment drawn on an account with funds insufficient to pay the check

must be paid anyway by the bank in order for the bank to avoid liability.

must be paid by the bank, but only if “properly payable.”

may be dishonored by the bank in the absence of an agreement extending credit to the customer in such instances.

may be dishonored by the bank but only in cases where the amount exceeds $2,500.

Question 3

Which person would most likely be liable for a check forgery?

A drawer whose name was forged.

A drawee bank that paid the check.

An indorser.

A payee.

Question 4

A post-dated check’s future date

renders the check not “properly payable.”

renders the check non-negotiable.

is enforceable as an obligation on the payor bank but only if the customer has given the bank notice of the post-dating.

is always valid.

Question 5

Saturday is

always a banking day under the Uniform Commercial Code.

a banking day under the Uniform Commercial Code, but only if the bank is normally open on that day.

always a banking day under Regulation CC.

a banking day under Regulation CC, but only if the bank is normally open on that day.

Question 6

Under Regulation CC, a bank must receive a dishonored and returned local check

in the same time it would take to forward the check in the forward collection process.

by the second business day following the banking day on which the check was presented to the paying bank by 2 p.m.

by the fourth business day following the banking day on which the check was presented to the paying bank by 4 p.m.

by the midnight deadline.

Question 7

What must a payor bank do by the midnight deadline?

pay the check, if it is going to do so.

dishonor the check, if it is going to do so.

create a substitute check, if it is going to do so.

deposit the check with the Federal Reserve.

Question 8

Leslie writes a check payable to Kyle for the purchase of a used car, which turns out to be defective. She requests that the bank not pay her check. The bank pays the check anyway. Leslie will have a claim against her bank if she

described the check with reasonable certainty.

made the request in writing.

post-dated the check.

all of the above.

Question 9

Jonah buys a couch from Stephanie’s Furniture Store for $800. He writes a check payable to her store and Stephanie attempts to cash the check at her local bank. Jonah’s bank claims there are insufficient funds in Jonah’s account so it dishonors the check; however, the funds in Jonah’s account were sufficient to cover the check Stephanie posts Jonah’s check on a bulletin board in her store for everyone visiting her store to see. Jonah wants to bring a claim against the bank for defamation of his reputation. He will

win, under the trader rule.

win, but only if Jonah deposits a substitute check.

lose, because only depositary banks are liable for wrongful dishonor.

lose, if he cannot demonstrate “actual damages” from Stephanie’s display of his check.

Question 10

Encoding and processing checks electronically in place of paper-based processing is called check

reconversion.

truncation.

elimination.

redaction.