Duties And Liability Of Parties

Front 1

What can a client recover if the bank wrongfully dishonors a check?

Back 1

Damages for whatever harm is proximately caused by
the wrongful dishonor.

Front 2

What TWO things are required for the death of a customer to revoke the bank's authority to pay a check?

Back 2

1. Bank knows of the death; AND
2. Has reasonable time to act on that knowledge

Front 3

What are the FOUR times a bank is liable for not honoring a check as drawn?

Back 3

1. Drawer's signature is forged
2. It is for more money than the original order (i.e. alteration by a 3rd party)
3. Bank pays the wrong person (forgery); OR
4. If the check is post dated

Front 4

How long are stop payment orders binding?

Back 4

- Oral = 14 days
- Written = 6 months.

Front 5

When will the bank not be laible for honoring a forged or materially altered check?

Back 5

- If the drawer was negligent

Front 6

When is the drawer liable to the drawee's bank for a wrongfully honored check?

Back 6

- if the drawer is negligent.

Front 7

When are the FIVE times a drawer is considered negligent?

Back 7

1. leaving blanks or spaces
2. failing to follow internal procedures designed to avoid forgery
3. Bank statement rule
4. ficticious payee rule
5. forgeries by employees who are entrusted with handling checks

Front 8

What is the bank statement rule?

Back 8

If a customer fails to report a forgery or alteration within a reasonable time, he or she is estopped from demanding recredit from the bank.

Front 9

What is the fictitious payee rule?

Back 9

if an imposter induces the drawer to write a check, the drawer is negligent