Asked by Suzette Miranda on Jul 21, 2024
Verified
Abyss handed over a $500 check to Howard Brothers for building him a terrace garden.The next day,Abyss notices that one part of the garden has not been finished.He calls his bank to order it to stop payment on the check.When Howard Brothers presents the check next week,the bank honors it.Which of the following is true in this case?
A) Since Abyss did not give the bank enough time to process a stop-payment order,the bank is not liable for this loss.
B) The bank is liable to recredit Abyss's account,since Abyss has suffered a loss by the bank's payment.
C) Abyss will not be able to show that he sustained any losses,hence cannot have his account recredited.
D) The bank is not liable for honoring any checks in good faith that are signed by the drawer-depositor.
Stop-Payment Order
An instruction given to a bank to not honor a check or payment that has been issued, but not yet cashed or withdrawn.
Terrace Garden
A garden or series of green spaces created on terraces that are either stepped naturally or constructed on slopes, often found in urban or hilly areas.
- Become knowledgeable about the duties and obligations banks have when dealing with cases of bounced checks, checks with future dates, and stop-payment requests.
Verified Answer
ZS
Zeinab SamhatJul 24, 2024
Final Answer :
B
Explanation :
While a stop-payment order is in effect,the drawee bank is liable to the drawer of a check that it pays for any loss that the drawer suffers by reason of such payment.However,the drawer-customer has the burden of establishing the fact and amount of the loss.
Learning Objectives
- Become knowledgeable about the duties and obligations banks have when dealing with cases of bounced checks, checks with future dates, and stop-payment requests.