Other Issues

Question 1

Discharge by Holder

Answer 1

Holder may discharge obligation by surrendering instrument to obligor, destroying it, canceling it, etc.

Question 2

Discharge by Holder Effect of Instrument

Answer 2

Certified Check- obligation discharged

Uncertified Checks- suspended, if later paid then discharged, if dishonored holder may sue

Question 3

Failure to produce Original Instrument

Answer 3

Enforcement by Person not in possession:
Must be person entitled to enforce
Show terms of the instrument
Must show facts preventing production of original

Question 4

Stop Payment Orders

Answer 4

Written better than oral
Stop payment order must be received at a time and in a manner that affords the bank a reasonable opportunity to act on it
Valid for 6 months and can be renewed

Question 5

Banks defenses if it pays over stop payment order

Answer 5

stop payment did not comply w requirements

no loss- customer would have to pay the check even if payment had been stopped

Question 6

Stop Order of Cashiers and Tellers Checks

Answer 6

Remitter cant stop payment

Bank may stop payment but then it risks liability for expenses, lost interest, and consequential damages

Question 7

Wrongful Dishonor

Answer 7

Drawee dishonoring a properly payable check

Question 8

Who has standing to complain of wrongful dishonor?

Answer 8

Drawer may bring action against the drawee for bouncing a check it should have paid

Question 9

Drawee’s Bank defenses to wrongful dishonor

Answer 9

Payment would overdraw the account

Check is more than 6 months old

Question 10

Payment in full check

Answer 10

A check on which the drawer conspicuously indicates that cashing the check acts as payment in full of an existing obligation which is unliquidated or subject to a bona fide dispute

Question 11

Exceptions to Payment in Full Check

Answer 11

Payee returns the money within 90 days
Payee is an organization and had previously notified the drawer of a particular person or address to send payment in full checks