Capsule Summary Payments LawPerspectivePart one Paying with CashChapter I CurrencyA. Meaning of Money, Currency, and PaymentB. When Must the Obligee Accept Cash as Payment?C. When Is Payment Made?1. Delivery2. EffectsD. When Can an Obligor Recover Payment Already Made?E. What Happens When Cash Is Lost or Stolen?1. Destroyed2. Damaged3. Lost4. StolenF. Review Questions (Answers in Appendix A)Part two Paying by CheckChapter II Requisites of a Check Under Article 3A. Contextual Overview1. Where Checks Fit Under UCC Article 32. Importance of Liability Under Article 3B. Requirements of Negotiability Applicable to Any Kind of Instrument1. In General2. How a Check Is Distinguished from Other Article 3 InstrumentsC. WritingD. Order a BankE. Payable on DemandF. Payable to Order or to Bearer (Words of Negotiability)1. Payable to Order2. Payable to BearerG. Review Questions (Answers in Appendix A)Chapter III Liability on a Check Under Article 3A. Signature on a Check Creates LiabilityB. Liabilities of Persons Who Normally Sign Checks1. Drawer2. Indorser3. Usual Non-Liability of the DraweeC. Mechanics of SignatureD. Means of Signature: By an Agent or Representative1. Principal’s Liability2. Agent’s LiabilityE. Liability for Unauthorized SignaturesF. Terms and Conditions of Liability1. Conditions of Liability: Presentment, Dishonor, and Notice2. Meaning and Mechanics of Satisfying Conditions of LiabilityG. Discharge of Liability on Instruments1. Meaning of Discharge2. Effects of Discharge3. Ways Discharge Can Occur4. Payment of the InstrumentH. Article 3 Discharge as a Defense Against Holder in Due CourseI. How an Instrument Affects the Underlying Obligation1. Typical Case?Suspension and Discharge or Revival2. When Person Entitled to Enforce the Instrument Is Not the Original Obligee3. When Taking an Instrument Discharges the Obligation4. Accord and SatisfactionJ. Review Questions (Answers in Appendix A)Chapter IV Suing on a Check Under Article 3A. Persons Entitled to Enforce1. Holder2. Nonholder in Possession with Holder’s Rights3. Nonholder Without Possession in Exceptional CasesB. Defenses to Liability1. Real Defenses2. Ordinary or Personal DefensesC. Holder in Due Course1. Requirements of Due-Course Status2. Payee as Holder in Due Course3. Taking Through a Holder in Due Course?The Shelter PrincipleD. Review Questions (Answers in Appendix A)Chapter V Check Collection Under Article 4A. Collecting Checks: Payor Bank as Sole Bank1. Presentment over the Counter for Payment in Cash2. “On Us” Checks: Payor Bank as Depositary BankB. Collecting Checks: Multiple Banks1. Getting the Check from the Depositary Bank to the Payor Bank2. Action Required of Payor Bank upon Presentment?Dishonor by Timely Return or Final Payment by InactionC. What Happens When Checks Are Paid?Relationship Between Final Payment and AccountabilityD. What Happens When Checks Are Dishonored1. Rights and Remedies of the Depositary Bank2. Rights and Remedies of the CustomerE. Review Questions (Answers in Appendix A)Chapter VI Checking Accounts Under Article 4A. Basic Relationship Between Customer and Bank1. Defined Mainly by Deposit Agreement2. “Properly Payable” Defines Main DutiesB. Wrongful Dishonor in General1. When Is a Dishonor Wrongful?2. Liability for Wrongful DishonorC. Wrongful Payment in the Absence of Fraud or Forgery1. In General2. Stop Payment Orders: 4?4033. Order Closing Account4. Untimely Checks5. Death or Incompetence of CustomerD. Review Questions (Answers in Appendix A)Chapter VII Check Fraud Under Articles 3 and 4A. Basis of Payor Bank’s Liability to Its Checking-Account Customer1. Ineffective Drawer’s Signature2. Ineffective Indorsement3. AlterationB. Payor Bank’s Defenses1. Authority2. Ratification3. 3?406?(Negligence)4. 4?406(c)?(d) (Breach of Conditional Duty to Discover and Report Check Fraud)5. Special Rules for Unauthorized Indorsements in Certain CircumstancesC. Shifting Check Fraud Losses1. Payor Bank Versus People Upstream in the Collection Chain?Primarily, Presentment Warranties2. Recovery over (Passing the Buck) Through 4?207 Transfer Warranties3. Handling the Typical Check Fraud Case of Ineffective Indorsement Through Warranty Actions4. Direct Actions in Cases of Ineffective IndorsementsD. Review Questions (Answers in Appendix A)Chapter VIII Bank Checks Under Articles 3 and 4A. Types of Bank Checks1. Certified Checks2. Cashier’s Checks3. Teller’s ChecksB. Stopping Payment1. Cashier’s Checks2. Denying Liability on Other Bank ChecksC. Enhanced Liabilities of Banks on Bank Checks, 3?411D. When Bank Checks Are Lost or StolenE. Review Questions (Answers in Appendix A)Part three Paying with DraftsChapter IX Paying Against Ordinary DraftsA. Ordinary Drafts Under Articles 3 and 4B. Simple Demand or Sight DraftC. Time or Acceptance DraftD. Collecting Drafts Through BanksE. Review Questions (Answers in Appendix A)Chapter X Paying Documentary Drafts Under Articles 3, 4, and 7A. Role of Documents of Title1. Definition of Document2. Distinguishing Between Negotiable and Non-Negotiable Documents3. How Documents Control Access to the GoodsB. Paying Against Negotiable Documents1. Step One: Creating the Documentary Draft2. Step Two: Sending the Documentary Draft for Collection3. Step Three: Presenting the Documentary Draft for PaymentC. Variations in the Scheme1. Discounting Documentary Drafts2. Shipping Under a Non-Negotiable Document3. Trade AcceptancesD. Review Questions (Answers in Appendix A)Part four Paying with CreditChapter XI Letters of Credit Under Article 5A. Defining Basic Terms and Relationships1. Commercial Credits2. Standby CreditsB. Determining Compliance with the Credit1. What Determines Compliance2. Degree of Compliance3. Timing of ComplianceC. Rightful Dishonor Despite Facial Compliance1. Reasons Justifying Dishonor Despite Compliance2. Reasons Not Justifying DishonorD. Review Questions (Answers in Appendix A)Chapter XII Credit CardsA. How Visa and MasterCard Work1. Bank Joins Bankcard Association2. Bank Issues Cards to Cardholders3. Merchants Open Accounts at Bank4. Cardholders Use Cards to Pay for Stuff Merchants Sell5. Merchants Collect Through Settlements on Interchange Network6. Interlocking Agreements Provide CredibilityB. What Law Applies1. State Law2. Federal Truth in Lending Act (TILA)3. CARD Act of 20094. ArbitrationC. Cardholder Right to Payment?Wrongful DishonorD. Cardholder Stopping Payment?Withholding Payment on Basis of Defenses Against Merchant1. No Common Law Right2. Limited TILA RightE. Cardholder Limited Liability for Unauthorized Use1. Applies to Any Person2. Protects Only Against Unauthorized Use3. No Protection in Some Cases Despite Lack of Authority4. Liability of Unauthorized UserF. Cardholder Rights Against Issuer for Errors Under Fair Credit Billing Act (FCBA)1. “Billing Error” That Triggers FCBA Rights2. Rights and Process3. Relationship to Unauthorized Use and Claims Against Merchant4. Relationship to Issuer Chargeback Against MerchantG. Review Questions (Answers in Appendix A)Part five Paying with Electronic Transfers of FundsChapter XIII Commercial Funds Transfers Under Article 4AA. Scope of Article 4A1. Key Terms2. Effectively Limited to Commercial Transactions3. Not Limited to Electronic TransfersB. Stages and Players Involved in an Article 4A Funds TransferC. Rights, Duties, and Payment1. Acceptance Is Key2. When Acceptance Is Required3. Effects of AcceptanceD. Stopping PaymentE. Unauthorized Payment Orders1. No Security Procedure Exists or Is Not Followed2. Security Procedure Followed3. Damages4. Recovery over Against ThiefF. Mistakes in Payment Orders1. Erroneous Payment Orders2. Misdescription of BeneficiaryG. Review Questions (Answers in Appendix A)Chapter XIV Consumer Funds Transfers Under the Electronic Fund Transfer ActA. Principal Sources of Law for Consumer Funds Transfers: Electronic Fund Transfer Act (EFTA) and Regulation EB. Scope of ApplicationC. Major Protections1. Disclosures2. Unauthorized Transfers3. Error Resolution4. Preauthorized Debits5. Stopping Payment of a Preauthorized Debit6. Debit Card Overdraft Fees7. Regulation of Debit Card Interchange FeesD. Civil Liability for EFTA Violations1. Wrongs Involving Stop Orders for Preauthorized Transfers?Section 1693h2. Other Wrongs and General LiabilityE. EFTA and Checks1. Article 3 Truncated Checks2. Re-Presented Checks3. Electronic Check ConversionF. Funds Transfers Beyond EFTA1. Multi-Purpose Cards Used for Credit2. Telephone Requests for TransfersG. Review Questions (Answers in Appendix A)Chapter XV Electronic Funds Transfers Which Do Not Debit a Consumer Bank AccountA. Why Other Payment Devices?B. How to RegulateC. Regulation by Amendment of EFTA or Regulation E1. Government Benefit Cards2. Payroll Cards3. Gift CardsD. Other Prepaid Products1. Description2. Consumer Protection Regulation of Prepaid Products3. Prepaid Products Outside the Scope of the New Rules4. Issues Not Addressed by the New RulesE. Remittance TransfersF. Alernative Payment Systems1. Payment Intermediaries2. Virtual CurrencyG. Review Questions (Answers in Appendix A)Appendix A Answers to Review QuestionsAppendix B Practice Examination QuestionsAppendix C Answers to Practice Examination QuestionsAppendix D GlossaryIndex