Question 1

Certified checks are payable at any time from the date they are issued.

Accepted Answer

Certified checks are guaranteed funds and can be cashed at any time from the date they are issued.

Question 2

Assume a drawer gives an incomplete check to a payee without including the amount of the check,and the payee completes the check by filling in a higher amount than that authorized by the drawer; if the bank pays the check according to the unauthorized terms,the drawer is generally liable for payment of the check as completed.

Accepted Answer

This is known as an altered check and the drawer is responsible for the amount that was originally authorized.

Question 3

A bank that pays a stale check in good faith may charge the drawer's account.

Accepted Answer

A bank may charge the drawer's account if they pay a stale check (a check that is presented for payment after the expiration of a certain period of time, usually six months) in good faith. However, if the bank pays a check that is deemed not payable, they may be liable for damages.

Question 4

Once a check becomes stale,the bank is no longer obligated to pay it.

Accepted Answer

Once a check becomes stale (usually after 6 months), the bank is no longer obligated to pay it.

Question 5

A bank is not obligated to certify a check.

Accepted Answer

A bank has the discretion to choose whether or not to certify a check, and is not legally obligated to do so.

Question 6

An obligated bank that wrongfully refuses to pay a cashier's check is liable to the person who asserts the right to enforce the check for expenses,loss of interest resulting from non-payment,and consequential damages.

Accepted Answer

According to the Uniform Commercial Code (UCC) § 3-411, an obligated bank that wrongfully refuses to pay a cashier's check is liable for expenses, loss of interest resulting from non-payment, and consequential damages.

Question 7

A bank's refusal to certify a check constitutes a dishonor of the check.

Accepted Answer

The answer of A bank's refusal to certify a check...

Question 8

Drawers sometimes write checks that omit certain information,such as the amount of the check or the payee's name,either on purpose or by mistake.These are called "implied-in-law" checks.

Accepted Answer

Checks missing information are not called "implied-in-law" checks; they are typically referred to as incomplete or blank checks.

Question 9

The drawer can stop payment on a certified check.

Accepted Answer

The purpose of certifying a check is to give a guarantee of payment to the payee, and once a check is certified, the funds are set aside to cover it. As a result, the drawer cannot stop payment on a certified check.

Question 10

A check is a certified check when the bank writes or stamps the word "certified" across the face of an ordinary check.

Accepted Answer

When a bank writes or stamps the word "certified" across the face of an ordinary check, it becomes a certified check, making its payment guaranteed by the bank.

Question 11

Banks are liable for any damages caused by paying any postdated check prior to its date.

Accepted Answer

Banks are generally not liable for any damages caused by paying a postdated check prior to its date. However, customers can request a stop payment on the check or close the account to prevent a postdated check from being cashed early.

Question 12

When a cashier's check is presented for payment,the issuing bank debits its own account.

Accepted Answer

When a cashier's check is presented for payment, the issuing bank debits its own account to make the payment. This is because a cashier's check is guaranteed by the bank, so the funds for the check are already set aside by the bank when the check is issued.

Question 13

Certified checks can be stopped by the drawer if they notify the drawee before the check has been presented.

Accepted Answer

Once a check is certified, the bank guarantees its payment, and the drawer cannot stop payment on it.

Question 14

A check that has been outstanding for more than three (3)months is considered "stale."

Accepted Answer

The answer of A check that has been outstanding for...

Question 15

When a customer opens a checking account at a bank,the customer impliedly agrees to keep sufficient funds in the account to pay any checks written against it.

Accepted Answer

This is a standard provision in most checking account agreements that customers agree to when opening the account. By maintaining a sufficient balance, customers ensure that their checks are not returned for insufficient funds, which can result in fees and damage to their creditworthiness. Failure to maintain a minimum balance may also lead to account closure or restrictions on the use of the account.

Question 16

The purchaser of a cashier's check is not required to have a checking account at the issuing bank.

Accepted Answer

The purchaser can typically pay cash or use funds from another account to obtain a cashier's check.

Question 17

Only the drawer can order a stop-payment order.

Accepted Answer

Only the drawer, the person who wrote and signed the check, can order a stop-payment order. This is because they are the ones who have the authority to control the funds in their account.

Question 18

Under UCC 4-401(c),to require a bank to abide by a postdated check,the drawer need only postdate the check to some date in the future.

Accepted Answer

Under UCC 4-401(c), the drawer must also notify the bank of the postdating in a timely manner to prevent the bank from paying the check before the date on the check.

Question 19

A cashier's check is a cancellable,non-negotiable instrument upon its issue.

Accepted Answer

A cashier's check is a non-cancellable, negotiable instrument upon its issue, meaning that once it is issued, the bank is liable for the funds and the recipient can negotiate it for cash or deposit.

Question 20

Certified checks never become stale.

Accepted Answer

Certified checks do not have an expiration date and remain valid until they are cashed or canceled.

Quiz 22: Banking System, E-Money, and Financial Reform