Which of the following is true of a bank's duty to honor checks?

Question

Quizplus · Accepted Answer

If a bank fails to honor a check because of a mistake on its part, such as overlooking sufficient funds, it can be held liable to the customer for damages incurred as a result. However, banks are generally under no obligation to honor all checks presented to them and may decline to do so for various reasons, such as insufficient funds or suspicion of fraud. The bank may also charge the customer's account if it creates an overdraft, but this is subject to agreement with the customer. The bank's liability to the holder of a check depends on several factors, including whether the check was certified and the nature of the bank's relationship with the customer. Therefore, options A, B, and D do not fully capture the nuances of a bank's duty to honor checks.

Which of the Following Is True of a Bank's Duty