Asked by Alyssa Currie on Jun 23, 2024
Verified
Which of the following is NOT a duty of a collecting bank in the collection process?
A) Duty of care.
B) Duty to act in a timely manner.
C) Duty to honor a valid stop payment order.
D) Duty to honor a restrictive endorsement.
Collecting Bank
A bank that processes checks and other negotiable instruments on behalf of a depositor, collecting funds from the bank on which the instruments are drawn.
Restrictive Endorsement
A limitation placed on the use of a check or other negotiable financial instrument, specifying conditions under which it can be transferred or cashed.
Stop Payment Order
A request made to a bank to cancel a check or payment that has not been processed yet.
- Identify the responsibilities and obligations of collecting banks during the check collection procedure.
Verified Answer
AG
Antoine GaudinJun 28, 2024
Final Answer :
C
Explanation :
A collecting bank's primary responsibilities include exercising due care in handling items for collection, acting promptly, and respecting restrictive endorsements. However, honoring a valid stop payment order is a duty of the payor bank, not the collecting bank.
Learning Objectives
- Identify the responsibilities and obligations of collecting banks during the check collection procedure.