Banker's Responsibilities in Relation to Legal Orders Quiz

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What action must a banker take if a cheque is presented after the customer's account is closed?

Refuse payment for the cheque

In what situation should a banker refuse payment for a cheque with a forged signature of the drawer?

When the cheque bears a forged signature of the drawer

What action should a banker take if a cheque is not signed by the drawer?

Not make the payment for the cheque

When should a banker refuse payment for a cheque presented at the counter if it is crossed?

When a crossed cheque is presented at the counter for payment Signup and view all the answers

What should a banker do if the customer intends to use the funds in a trust account for personal use in breach of trust?

Stop payment for the cheques issued by the customer or trustee Signup and view all the answers

What is the statutory protection available to a paying banker in case of risks or difficulties?

Statutory protection Signup and view all the answers

What are the two conditions that must be fulfilled for a paying banker to receive protection in respect of a materially altered cheque?

The material alteration is not apparent or noticeable even on a careful examination by the banker, and the payment is a payment in due course. Signup and view all the answers

Under what circumstance is a paying banker discharged from liability when paying a crossed cheque?

When the payment is made to a party crossed on the cheque in due course. Signup and view all the answers

What conditions must be met for a paying banker to be protected in case of a crossed cheque payment?

The payment must be made to the party crossed on the cheque or to the banker to whom it is crossed or his agent for collection, and the payment must be in due course. Signup and view all the answers

What is the importance of a regular or correct endorsement on a draft for a paying banker?

It is one of the conditions that must be fulfilled for the paying banker to receive protection. Signup and view all the answers

How does the statute protect the paying banker in case of a materially altered cheque?

By requiring that the material alteration is not apparent and the payment is in due course. Signup and view all the answers

What type of payment discharges a paying banker from liability when dealing with a crossed cheque?

Payment in due course to the party crossed on the cheque or their banker or agent for collection. Signup and view all the answers

What statutory protection does the Indian Negotiable Instruments Act of 1881 provide to a paying banker in case of a forged endorsement of the payee on an order cheque?

Protection under Section 85(1) Signup and view all the answers

Under what conditions does a paying banker receive protection in case of a forged endorsement of the payee on an order cheque?

Regular or correct endorsement of the payee and payment in due course Signup and view all the answers

Which section of the Indian Negotiable Instruments Act extends protection to paying bankers in case of forgery of any subsequent endorsement on an order cheque?

Section 16(2) Signup and view all the answers

What are the conditions for a paying banker to receive protection in case of a forged endorsement of the endorsee on an order cheque?

Regular or correct endorsee's endorsement and payment in due course Signup and view all the answers

In the context of forged endorsement protection, what does 'discharged by payment in due course' mean?

Drawee is released from liability by making payment in good faith and without negligence Signup and view all the answers

What specific requirement must be met for a paying banker to be discharged of liability when facing a forged endorsement on an order cheque?

Payment must be made in due course Signup and view all the answers