[Bad Check] Alana,a bank teller,saw that customer Liam did not have sufficient funds in his account to cover a check presented for payment.Alana was new and was confused about what to do with the check.She asked the bank manager,Pedro,about any available options.Pedro told her that the bank was required by law to dishonor the check,the check should be returned to the holder with a notation that it had been dishonored,and that it could not be presented again.Alana asked Pedro if there were any policies the bank could institute to provide customers with overdraft protection,and Pedro answered that those were prohibited by law.
-Which statement is true regarding Pedro's statement that the bank's only choice was to dishonor the check?
A) Pedro is correct.
B) Pedro is incorrect because under the UCC,the bank could have created an excessive draft by paying the check and closing the account at which point,the customer would be free to open a new account.
C) Pedro is incorrect because under the UCC,the bank could have created a secondary draft by paying the check and charging the account the amount short.
D) Pedro is incorrect because under the UCC,the bank could have created a subsequent draft by paying the check,and the bank would then have needed to seek the customer's permission to charge his account the amount short.
E) Pedro is incorrect because under the UCC,the bank could have created an overdraft by paying the check and later charging the account the amount short.
Correct Answer:
Verified
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