East Mississippi Community College

ECON 2123

Chapter 31-CHECKS AND FUNDS TRANSFERS

TRUE/FALSE

1)A check is a particular kind of draft.

2. The drawee of a check is always a bank.

3. A check is drawn on the assumption that the bank has sufficient funds in the drawer's account for payment.

4. Most states provide that if a dishonored check is not made good within a stated period of time, it will be presumed that the check was originally issued with the intent to defraud.

5. In the case of either a check or a draft, the drawer may be held civilly liable if the instrument is dishonored.

6. To be effective, checks must be executed on forms that are printed expressly for that purpose and issued by a bank or other financial institution.

7. The standard form of check does not specify when it is payable, and it is therefore automatically payable on demand.

8. The delivery of a check is regarded as an assignment of money on deposit, and the drawee bank is required to pay the holder the amount of the check.

9. When a bank certifies a check, the amount involved in the certification will be retained in the depositor's account until payment of the certified check.

10. A check may be certified by a bank on request of the drawer or the holder.

11. A “tender” occurs when the holder of a check or other consumer transaction authorization demands payment.

12. Checks that involve amounts of more than $1,000 generally trigger the bank reporting requirements under the USA Patriot Act.

13. A bank is required to pay a check presented more than six months after its date.

14. A buyer may stop payment on a certified check issued to a seller if the goods are defective when received.

15. A written stop payment order is effective for one year.

16. The act of stopping payment on a check imposes no liability on the depositor.

17. Although a drawer has stopped payment on a check, the drawer still may be held liable on the check unless the drawer has a defense that will defeat the holder in a lawsuit.

18. A bank's liability to the drawer of a check for wrongfully dishonoring a check is based largely on contract law.

19. If a bank improperly refuses to make payment of checks for which its customer has sufficient funds on deposit, it is liable to the drawer for damages sustained by the drawer in consequence of such dishonor.

20. If a check has not been certified, a holder has no claim against the bank for the dishonor of a check.

21. A bank must be given a reasonable amount of time to put a stop payment order into effect.