Section 27 Checks, the Banking System, and E-Money

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2. . . Presentation. Checks and electronic asset exchanges (EFT\'s) are administered by Articles 3 and 4 of the UCC.Article 3: covers every single debatable instrument, including checks.Article 4: builds up a system for store, EFT\'s and checking assentions in the middle of banks and clients.. 3.

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Part 27 Checks, the Banking System, and E-Money

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Introduction Checks and electronic store exchanges (EFT's) are administered by Articles 3 and 4 of the UCC. Article 3: covers every single debatable instrument, including checks. Article 4: sets up a system for store, EFT's and checking assentions amongst banks and clients.

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§1: Checks Cashier's Check: bank fills in as drawer and drawee. Bank accepts accountability. Explorer's Check: must be marked by the drawer again when gotten the money for. Ensured Check: bank acknowledged cash and bank will pay check from its own record.

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Checks [2] Lost, Destroyed, or Stolen Checks. Must request a discount from bank before the check is paid by bank. At that point hold up 90 days - in the event that somebody goes in close vicinity to 90 days, bank pays them, if nobody draws near 90 days, bank gives discount.

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§2: Bank-Customer Relationship Creditor-Debtor: Bank owes cash to client and must respect client's checks. Office made: Bank must pay client's checks and gather for client on the off chance that she stores checks.

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§3: Honoring Checks Banks that wrongfully shame client's checks are obligated for real harms as it were. Overdrafts: bank's decision to respect or not, then hold client subject for sum. Case 27.1: Kendall Yacht Co. v. Joined California Bank (1975). On a Joint record, client is just at risk if marked overdraft or profited from it.

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Honoring Checks [2] Postdated Checks: Bank can pay unless told so as to follow up on it. Stale Checks: following 6 months, it is bank's decision whether to respect or not. Passing or Incompetence of a Customer: Bank can pay until it knows and can pay checks drawn before death or inadequacy 10 days after it knows - unless advised by a relative or agent.

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Honoring Checks [3] Stop-Payment Orders: Customer can't stop ensured checks and should give bank enough time to act. Oral S.P.= 14 days, Written = 6 months. Client's obligation for wrongful stop-installment arrange = must have a genuine or individual barrier as required.

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Honoring Checks [4] Payment on a Forged Signature of the Drawer. Bank must re-credit client's record - unless client is careless before or after the fraud. Before: leaves huge spaces, leaves registration machine opened, elastic stamp opened, carelessly composed. After: neglects to look at explanation and inform bank inside one year. Case 27.2: Espresso Roma Corp. v. Bank of America N.A. (2002).

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Honoring Checks [6] Bank may not recuperate from the individual it paid, or who was paid in course of business if that individual acted in compliance with common decency on the grounds that there was no Breach of Presentment Warranty. Moderator did not realize that the mark or the creator or drawer was produced. Bank can recoup from counterfeiter in light of the fact that the falsifier knew.

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Honoring Checks [7] Payment on a Forged Indorsement – if not to client's request, bank must re-credit unless client is careless before or after falsification. Before phony: if extensive crevices or deficiency. After imitation: client must advise bank (i) inside 3 days after fashioned things made accessible to client, or (ii) if a progression of fabrications, inside 30 days of receipt of either the bank articulation or wiped out checks. Case 27.3: Halifax Corp. v. To begin with Union National Bank (2001).

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Honoring Checks [8] Bank may recuperate from the individual it paid (not clerk, teller, or affirmed checks) if Warranty. Moderator did not have Good Title due to the manufactured indorsement. Changed Checks. Bank has suggested obligation to examine checks. Client Negligence shifts misfortune to client if bank pays in compliance with common decency without notice. Bank may recoup from different gatherings.

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§4: Accepting Deposits Availability Schedule for Deposited Checks. Enthusiasm Bearing Accounts. The Collection Process.

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Availability Schedule for Deposited Checks Expedited Funds Availability Act of 1987 and Federal Reserve Board's Regulation CC. Require that registers stored with banks must be accessible for withdrawal with check or money inside a specific number of days from the date of store.

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Regulation CC Availability Requirements Local checks: one business day from the date of store. Non-neighborhood checks: five business days from the date of store. A few stores must be accessible the following business day. Stores made in non-restrictive ATMs: 5 business days. A few special cases for new-client stores and extensive stores.

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Interest-Bearing Accounts Truth-in-Savings Act of 1991 and Regulation DD oblige banks to: Pay premium in light of the full adjust of the client's enthusiasm bearing record every day. Furnish clients with certain data concerning equalization required, measure of enthusiasm on record, expenses, charges, punishments, and to supply client with articulation containing certain data on the enthusiasm for the record.

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The Collection Process Players: Depository Bank. Payor Bank. Middle person Banks. Gathering Banks.

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Check Collection Between Customers of the Same Bank must present check to be paid prior to midnight of the following day taking after receipt. "Conceded posting" bank can set e.g., 2:00 pm as cutoff hour. Bank can disrespect the check by the opening of the second keeping money day taking after its receipt or check is viewed as paid.

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Check Collection Between Customers of Different Banks Each bank in the accumulation procedure must pass the keep an eye on before midnight of the following saving money day taking after its receipt. Payor bank must shame or profit it by midnight for the following managing an account day taking after receipt, or the payor bank is responsible for the face measure of the check.

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How the Federal Reserve System Clears Checks Electronic Check Presentment. Significantly quicker as opposed to manual check preparing. Check may not be physically moved, but rather encoded data sent by PC. Those gatherings who encode and tell make an indistinguishable guarantees from if the check were sent physically.

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§5: Electronic Fund Transfers Types of EFT Systems. Shopper Fund Transfers: represented by Electronic Fund Transfer Act of 1978. Business Fund Transfers: represented by Article 4A of the UCC.

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§6: E-Money and Online Banking Digital Cash (e-cash) in savvy cards. Web based Banking Services. Online contract amongst bank and client administers terms. Administrative Compliance. Security Protection. Electronic Communications Privacy Act (1986). Gramm-Leach-Bliley Act (1999).

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§7: Uniform Money Services Business Act Recommended by NCCSL covers: Traditional Money Services and Internet-based Money Services. UMSBA on the web. UMSBA may likewise apply to: E-cash, Internet scrip, and Stored-esteem items (prepaid cards).

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Law on the Web FDIC . American Banker's Association . Security First Network Bank . E-Money ( Digicash ). (connections to e-banks). Legitimate Research Exercises on the Web.