UCC Summary

Question 1

UCC Article 3

(and key concepts)

Answer 1

Negotiable instruments

Inadvertent accord and satisfaction (90 days) due to lockboxes

Bank’s failure to examine forged signature does not result in failure to exercise ordinary care

Question 2

What all does the UCC provide legal guidance for?

Answer 2

Negotiable instruments

Deposit reconciliation

Funds transfers (security procedures and consequential damages)

Letters of Credit

Secured Transactions (collateral)

Question 3

UCC Article 4A

Answer 3

Electronic funds transfers

Question 4

Two Primary Provisions of Article 4A of the UCC

Answer 4

Security procedures – commercially reasonable for verifying payment

Consequential damages – typically the bank won’t be liable, unless in writing; incorrectly executes is responsible for interest and incidental expenses

Question 5

UCC Article 9

Answer 5

Liens

UCC-1 Financing Statement

Perfection of security interest

Question 6

UCC Article 4

Answer 6

Banking relationships

Governs:
**bank deposits and collections
**providing rules for check processing
**automated inter-bank collections

Question 7

A bank’s failure to examine a forged signature on a check would be covered under which UCC Article?

Answer 7

UCC Article 3 - Negotiable Instruments

Question 8

Confusing question from Discussion Questions from Chapter 10

Which procure-to-pay step initiates the inventory period and which order-to-cash step ends it?

1. Send and receive PO
2. Ship and receive goods and invoice
3. Send and receive payment
4. Reconcile and account

Answer 8

C - See chart on page 309