Chapter 34 - Checks and electronic transfers. In this chapter students will be able to: Recall that bank must pay any properly drawn & payable check; explain bank’s obligation to customer when presented with stop-payment order, certified check, cashier’s check, or a forged or altered check; discuss major features of Electronic Funds Transfer Act. | Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin 7 Negotiable Instruments Negotiation and Holder in Due Course Liability of Parties Checks and Electronic Transfers Commercial Paper P A R T Checks and Electronic Transfers P A E T R H C 34 Whether we like it or not mankind now has a completely integrated international financial and informational marketplace capable of moving money and ideas to any place on this planet in minutes. Walter Wriston in a speech to the International Monetary Conference, London (June 11, 1979) Learning Objectives Recall that bank must pay any properly drawn & payable check Explain bank’s obligation to customer when presented with stop-payment order, certified check, cashier’s check, or a forged or altered check Discuss major features of Electronic Funds Transfer Act Two sources of law govern the relationship between the depositor and the drawee bank: the deposit agreement and Articles 3 and 4 of the UCC Overview . | Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin 7 Negotiable Instruments Negotiation and Holder in Due Course Liability of Parties Checks and Electronic Transfers Commercial Paper P A R T Checks and Electronic Transfers P A E T R H C 34 Whether we like it or not mankind now has a completely integrated international financial and informational marketplace capable of moving money and ideas to any place on this planet in minutes. Walter Wriston in a speech to the International Monetary Conference, London (June 11, 1979) Learning Objectives Recall that bank must pay any properly drawn & payable check Explain bank’s obligation to customer when presented with stop-payment order, certified check, cashier’s check, or a forged or altered check Discuss major features of Electronic Funds Transfer Act Two sources of law govern the relationship between the depositor and the drawee bank: the deposit agreement and Articles 3 and 4 of the UCC Overview The deposit agreement establishes depositor and drawee/payor bank relationship as creditor and debtor so that when a person deposits money into a bank account: Depositor is a creditor of the bank to extent of deposits and the bank becomes the debtor Deposit Agreement As agent, bank owes duty of ordinary care to follow depositor’s reasonable direction about payment of checks and collect checks and other deposits to the account Bank as Agent of Depositor Bank is a depositor’s agent for check collection Bank has a duty to pay a properly drawn and payable check and is liable for actual damages caused by a wrongful dishonor plus consequential damages [4–402] No duty to pay stale checks (> 6 mo. old) Duty to pay may be terminated by depositor’s stop payment order or bankruptcy Bank’s Duty to Pay Bank has the right to charge any properly payable check to depositor’s account even if an overdraft results An altered check or one with a forged signature is not properly payable .
