UCC ARTICLES 3 &4- LAW OF CHECKS AND SHARE DRAFTS

Question 1

The two major problems that can occur with checks are….

Question 2

The primary purpose of the UCC Articles 3 & 4 are….

Question 3

The properly payable rule is:

Question 4

A check made payable to “john doe, Jane doe” without “and” in between the names is payable to eith John or Jane. True or False?

Question 5

What is a post dated check? Is it illegal?

Question 6

If you just sign (endorse) your name o the back of the check, that endorsement is referred to as a “blank endorsement” and anyone who is in possession of that check is in rightful possession of the check. True or False?

Question 7

When the CU encodes a check it warrants (promise by law) to all other financial institutions that take the check after it that the check has been encoded correctly. True or False?

Question 8

The UCC’s articles 3&4 require a CU to return a check that it will not pay by its “midnight deadline,” which means that the check must be returned by midnight of the next banking day after the banking day the check is received. True or False?

Question 9

Writing paid in full on a check to a creditor for an amount less than owed for a debt in the hope that the creditor won’t notice teh language will fail to discharge the drawer’s obligation becasue such payment is not made in good faith. True or False?

Question 10

When a member loses your cashiers or tellers check, once she or he makes a claim for a refund for the lost check the credit union must immediately give her or him a replacement check. True or False?
Can we make the member wait 90 days?

Question 11

A CU must pay a member’s check that is more than six months old presentment. True or False?

Question 12

Under the UCC 3 & 4 a negotiable instrument is a check or share draft, and is not an EFT or ACH under Reg E, a transaction acct under Reg D, or a term share account under the TIS Act. True or False?

Answer 12

True

Question 13

The reason it is important to understand the nonpayment and fraud issues under State and Federal check law is becasue checks for large amounts will continue to be presented for payment and offered for deposit to all CUs. True or False?

Question 14

A check is the only form of payment that allows a person (the drawer) to completely control 1. who gets paid (the payee), 2. when the payee will get paid, and 3. how much the payee will get paid. True or False?

Answer 14

True

Question 15

The reason that checks are still used as a form of payment is becasue a check (and an image of a check) is proof of payment forever for a person (as a drawer), and not becasue numerous consumers do not know how to use electronic access devices for payment, or because Reg E and ESign do not mandate the use of EFTs and ACHs. True or False?

Answer 15

True

Question 16

Simply by looking at their checking or share draft account statements, member-drawers can (and should) notify the CU about: Alterations, Forged Indorsements, Forged Drawer’s signatures, or Counterfeit Checks?

Question 17

How long do members have to report their checks with:
Alterations: 0 hr, 24hr, 30 days, 60 days, 1 year, or 3 years
Forged Indorsements: 0 hr, 24hr, 30 days, 60 days, 1 year, or 3 years
Forged Drawer’s Signatures: 0 hr, 24hr, 30 days, 60 days, 1 year, or 3 years