Banking Law and Regulations Quiz

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Questions and Answers

What is an unconditional promise to pay the holder of a note?

A promissory note (correct)

A nonnegotiable instrument

A cheque

A negotiable instrument

What is the definition of a cheque?

A written order to pay, on demand and unconditionally, a definite sum of money (correct)

A written promise to pay a specific sum of money

A written order to pay, on a specific date, a definite sum of money

A written order to pay a specific sum of money

Who is the person who is ordered to pay the money in a draft or a cheque?

Payor

Payee

Drawer

Drawee (correct)

What is the name of the person who draws a cheque?

Drawer Signup and view all the answers

What is the consequence of violating the 2004, Banking Act of Ghana?

All of the above Signup and view all the answers

What type of instrument is EZ Credit Company's instrument?

Non-negotiable, because it includes an extension clause Signup and view all the answers

What type of instrument is Quincy's check to Replay Stadium?

Order instrument Signup and view all the answers

What type of instrument is Tyrone's check to Cash?

Bearer instrument Signup and view all the answers

What is the exception to the doctrine of privity of contract?

Negotiation of bills of exchange Signup and view all the answers

Which of the following is a type of negotiable instrument?

Cheque Signup and view all the answers

What is the primary duty of a customer of a bank?

To issue cheques in a manner as to prevent fraud and forgery Signup and view all the answers

What is the name of the payments being made by Akosua under the policies?

Premiums Signup and view all the answers

What is the broad type of insurance Akosua bought concerning Policy A?

Property insurance Signup and view all the answers

What is the broad type of insurance Akosua bought concerning Policy B?

Life insurance Signup and view all the answers

Should Akosua die 10 years after contributing to Policy B, which of the following persons will receive the sum assured?

Akosua's beneficiaries as specified in the policy Signup and view all the answers

What is the frequency of payment for Policy A?

Annually Signup and view all the answers

What is the banker's obligation when a customer disputes a transaction?

Must investigate and immediately recredit the customer's account Signup and view all the answers

What happens when a banker makes payment of a cheque after banking hours?

The banker is liable Signup and view all the answers

What is a condition for a cheque to be honored by the paying banker?

The amount in words and figures must be clear Signup and view all the answers

What is a cheque dated for a future date called?

Post-dated cheque Signup and view all the answers

Must payment of a cheque be made by the banker within banking hours?

True Signup and view all the answers

Is a bearer cheque always payable to the bearer?

True Signup and view all the answers

What is the status of payment when a bank pays a cheque according to the apparent tenor?

Payment in due course Signup and view all the answers

What is the characteristic of a negotiable instrument?

It is a money substitute Signup and view all the answers

What must be included in the instrument for it to be negotiable in the case of Uri and Verity Mortgage Service?

The signature of Uri. Signup and view all the answers

Is the instrument signed by USA Oil Corporation negotiable?

Yes, it is negotiable. Signup and view all the answers

What is required for the instrument signed by Hoppy to be negotiable?

It must include no conditions. Signup and view all the answers

Is the promissory note signed by Opal negotiable?

Yes, it is negotiable. Signup and view all the answers

What is the likely outcome of SU's suit to collect on the note against Ray?

The court will rule in favor of SU because the note is negotiable. Signup and view all the answers

What is required for an instrument to be negotiable?

It must include the signature of the party making the promise. Signup and view all the answers

What makes an instrument nonnegotiable?

The inclusion of any conditions to the repayment of the loan. Signup and view all the answers

What is true about the instrument signed by Hoppy?

It is negotiable because it includes the signature of Hoppy. Signup and view all the answers

What is a written notice that promises to pay a certain amount of money to another at a definite time?

Promissory note Signup and view all the answers

What is a holder of a bill who has given no value or consideration for it known as?

A mere holder Signup and view all the answers

What is an unconditional order to pay?

Two-party instrument Signup and view all the answers

What is an unconditional promise to pay?

One-party instrument Signup and view all the answers

What do financial institutions provide to the public?

Financial Services Signup and view all the answers

What does it mean to indemnify?

Put back in the same financial position just prior to the loss Signup and view all the answers

What is the most common form of general insurance in Ghana?

Motor insurance Signup and view all the answers

What did Amaya's father buy her as a reward for her academic achievement?

A car Signup and view all the answers

Study Notes

Banking and Insurance

Cheques must be investigated immediately and credited to the account if there's a dispute (Mike's account).
A banker who makes payment of a cheque after banking hours is liable.
Conditions for honoring a cheque include the amount in words and figures being clear and not differing.
Post-dated cheques are not valid until the date on the cheque.
Payment of a cheque must be made by the banker within banking hours.
A bearer cheque is always payable to the bearer.
Stopped payment cheques should not be paid by the banker.
Payment of a cheque according to the apparent tenor, in good faith, and without having reason to doubt the bonafide of the presenter is payment in due course.
Crossing of a cheque can be done by the drawer or the banker.
A banker who collects a cheque for and on behalf of his customer is a collecting banker.
The insurance industry in Ghana is composed of insurance companies, the National Insurance Commission, prudential insurance, insurance intermediaries, and re-insurance companies.
Negotiable instruments are money substitutes.
The transferee of a negotiable instrument takes the instrument subject to the defects in the transferor's title.
Negotiation of bills of exchange operates as an exception to the doctrine of privity of contract.
Under Ghanaian law, cheques are an example of bills of exchange and negotiable instruments.
A customer's duties include depositing money, issuing cheques in a manner to prevent fraud and forgery, communicating unusual occurrences, and managing transactions by periodic reconciliations.

Insurance

Akosua bought two policies: Policy A - on the car (annual payment) and Policy B - on her person (monthly payment to her father and sister in case of death).
The payments made by Akosua are premiums.
Policy A is an example of property insurance.
Policy B is an example of life insurance.
If Akosua dies, the sum assured will be paid to her father and sister.

Negotiable Instruments

A negotiable instrument must include the signature of the party making the promise.
USA Oil Corporation's instrument is not negotiable because it states an express condition to payment.
To finance the purchase of a car, Hoppy signs an instrument promising to pay to Ideal Credit Union; to be negotiable, it must not include conditions on the repayment of the loan.
Opal's promissory note is negotiable because it is payable with interest at the legal rate.
Ray's promissory note is not payable at a definite time, so the court will rule in favor of State University.
EZ Credit Company's instrument is not negotiable because it includes an extension clause.
Quincy's check payable to Replay Stadium is an order instrument.
Tyrone's check payable to "Cash" is a bearer instrument.

Banking and Financial Institutions

The Bank of Ghana may impose sanctions on banks, including recommending the removal of directors, appointing a conservator, or appointing a liquidator.
The parties involved in a draft or cheque are the drawer, drawee, and payee.
A written order drawn on a bank by a depositor is a cheque.
A written notice promising to pay a certain amount of money at a definite time is a promissory note.
A holder of a bill who has given no value or consideration for it is a mere holder.
An unconditional order to pay is a three-party instrument.
An unconditional promise to pay is a two-party instrument.
Providing financial services to the public is a financial institution.
To indemnify means to put back in the same financial position just prior to the loss.
The most common form of general insurance in Ghana is motor insurance.
Amaya's insurance policy is an example of comprehensive insurance.

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Description

Questions on banking laws, regulations and procedures, including cheque payments and dispute resolution.