Bài giảng Business Law (13th edition) - Chapter 34: Checks and Electronic Transfers

Commercial PaperNegotiable InstrumentsNegotiation & Holder in Due CourseLiability of PartiesChecks and Electronic Transfers7McGraw-Hill/Irwin Business Law, 13/e© 2007 The McGraw-Hill Companies, Inc. All rights reserved.Checks and Electronic TransfersPAETRHC34“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 ObjectivesThe drawer-drawee relationshipForged and altered checksCheck collection and funds availabilityElectronic transfers34 - *The deposit agreement and UCC Articles 3 and 4 govern the relationship between the depositor and the drawee bankDeposit agreement establishes relationship as creditor and debtor: Person depositing money into a bank account is a creditor of bank to extent of depositsBank becomes the person’s debtorOverview34 - *Bank is depositor’s agent for check collectionAs agent, bank owes a duty of ordinary care to (a) follow depositor’s reasonable direction about payment of checks and (b) collect checks and other deposits to the accountBank is liable for actual and consequential damages from wrongful dishonor [4–402]Bank may charge properly payable check to depositor’s account even if overdraft resultsBank as Agent of Depositor34 - *When a bank takes a check for deposit to a customer’s account, it places a hold on funds represented by check until it collects from drawee bankThen funds become available to depositorStop-payment order is customer’s request to drawee bank to not pay or certify a checkBank must receive timely notice and a reasonable description of the checkDepositor & Bank34 - *Certified check: drawee bank promises to pay the check instead of the drawer [3–409] Bank debits customer’s account and transfers funds to a special bank accountCashier’s check: bank is both drawer and drawee, thus the bank is primarily liableCertified & Cashiers Checks34 - *Federal law, short-titled Check 21, allows banks to handle more checks electronically and is an overlay to state lawElectronic Funds Transfer Act governs the electronic funds transfer systems (EFTs) for consumers: automatic teller machines, point of sale terminals, preauthorized payments, telephone transfers, and wire transfersCheck Collection34 - *Federal Reserve operates Fedwire, a domestic wire transfer systemInternational wire transfers made through New York Clearinghouse Interbank Payments System (CHIPS)At right, bank trading roomWire Transfers34 - *Test Your KnowledgeTrue=A, False = BA depositor is a creditor of the bank to the extent of deposits; the bank is the debtor. A bank has the right to charge any properly payable check to a depositor’s account, but not if an overdraft results. Check 21 allows banks to handle more checks electronically and provides that state law apply only to business-to-business transfers.34 - *Test Your KnowledgeTrue=A, False = BFedwire is the international wire transfer system.An altered check or one with a forged signature is not properly payable.A stale check is over 30 days old.A bank is an agent and owes a duty of ordinary care to the depositor.34 - *Test Your KnowledgeMultiple ChoiceLee went to State Bank and gave them cash in return for a check in which State Bank was both drawer and drawee. Lee purchased a: (a) Cashier’s check(b) Teller’s check (c) Special indorsement check (d) Wire transfer(e) none of the above34 - *Test Your KnowledgeMultiple ChoiceA drawee bank isn’t obligated to certify a check, but if it certifies: (a) it substitutes its promise to pay the check for the drawer’s promise and becomes obligated to pay the check(b) it guarantees that drawer will pay the check upon payee’s presentment(c) it merely warrants that the drawer’s signature is authentic and authorized(d) none of the above34 - *Thought QuestionsThe increased use of online banking and electronic transfers has raised concerns about privacy. Are you concerned? How should the banking industry and businesses respond to a customers’ concern about privacy?34 - *