V. ANSWERS TO PROBLEMS AND PROBLEM
CASES:
1. Yes. The bank breached its contract with the depositor by allowing the
unauthorized
transfer of funds from the account. A bank may charge against the account of
a
2. Yes. The check was properly payable from the account; it had not been altered nor did it
bear
a forged or unauthorized signature. When sufficient funds are not available in a
drawer’s
account to pay a check presented for payment, the bank has two options: first, it may refuse
to
pay the check, in which case it has no risk of liability for wrongful dishonor. Second, it
may
3. No, under Section 3-409, a check is not an assignment of funds in the hands of the
drawee
and it is not liable on the instrument until it accepts it. The check is an order to the bank
by
4. Yes. While a drawer has the right to stop payment on a check, the drawer remains liable to
a
holder in due course. Here, there is no question that First National Bank is a holder in
due
5. Yes. The court held that the bank was authorized to pay the check. A bank can charge
the
account of a customer for checks it pays in good faith. This is true even though the
bank
6. Yes. The court held that the bank was entitled to charge back the account because it had
7. No. The court held that the bank could shorten the one-year UCC statute of repose period
for
reporting unauthorized checks or withdrawls to 60 days and that the statute of repose was
not
8. Yes. The court found that the two transactions were unauthorized. Ognibene did not
initiate
the withdrawals, did not authorize the person in the automated teller machine area to
make
them, and did not benefit from them. Where Ognibene merely gave his card to the
person