Asked by derrick johnson on May 10, 2024
Verified
Which statement is true regarding the bank manager saying that the bank could not incur any liability for damages for the failure to stop payment on a check?
A) The manager is correct.
B) The manager is incorrect, and the bank will incur liability or damages suffered by a customer due to the failure to stop payment when a stop-payment order was properly provided.
C) The manager is incorrect, and the bank will incur liability or damages suffered by a customer due to the failure to stop payment when a stop-payment order was properly provided, but only up to $500.
D) The manager is incorrect, and the bank will incur liability or damages suffered by a customer due to the failure to stop payment when a stop-payment order was properly provided, but only up to $1,000.
E) The manager is incorrect, and the bank will incur liability or damages suffered by a customer due to the failure to stop payment when a stop-payment order was properly provided, but only up to $1,500.
Stop-Payment Order
A request made to a bank by an account holder to not pay out on a check or transaction previously issued or authorized.
Liability
Legal responsibility for one's actions or inactions, particularly in causing harm to others or to property, which may result in civil or criminal penalties.
UCC
Uniform Commercial Code, a comprehensive set of laws governing all commercial transactions in the United States.
- Acquire insight into the legal outcomes of executing stop-payment orders on checks, with an emphasis on requisite advisories and the obligations of banking institutions.
Verified Answer
UN
Ubaid Nasir PatelMay 16, 2024
Final Answer :
B
Explanation :
The manager is incorrect because under the Uniform Commercial Code (UCC), a bank may be held liable for damages suffered by a customer due to the bank's failure to act on a properly issued stop-payment order, regardless of whether the order was oral or written.
Learning Objectives
- Acquire insight into the legal outcomes of executing stop-payment orders on checks, with an emphasis on requisite advisories and the obligations of banking institutions.