Asked by Alexander Schneider on Jul 17, 2024
Verified
Which of the following is true of a bad-check statute?
A) The payee does not have the obligation of informing the drawer of the nonpayment of the check.
B) Bad-check statutes are effectively used as a means of collection.
C) The payee can prosecute the drawer immediately after being notified of a bad check by the drawee bank.
D) The drawee bank can prosecute the payee in case of dishonor of a check.
Bad-Check Statute
Laws that penalize individuals who knowingly write checks from a bank account without sufficient funds.
Drawee Bank
The bank upon which a check is drawn, responsible for paying the check amount to the bearer or designated payee.
Drawer
The party who draws a draft, that is, the party who orders that the money be paid.
- Understand the legal implications of the use, dishonor, and rectification of checks in banking transactions.
Verified Answer
AR
Alaisaj RichardsonJul 20, 2024
Final Answer :
B
Explanation :
Bad-check statutes allow for criminal prosecution of individuals who write checks with insufficient funds. They are commonly used as a means of collection for payees who receive bad checks, as it provides a legal avenue to compel payment. However, the payee still has an obligation to notify the drawer of the non-payment of the check before pursuing legal action. The drawee bank does not have the authority to prosecute the payee in case of dishonor of a check.
Learning Objectives
- Understand the legal implications of the use, dishonor, and rectification of checks in banking transactions.