Classnotes Banks and Checks

Classnotes Banks and Checks - Banks and Checks Creditor...

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Banks and Checks Creditor – Debtor Relationship Is Created when a customer deposits money into the bank The customer is the creditor and the bank is the debtor Principal – Agent Relationship Created if: The deposit is a check that the bank must collect for the customer or the The customer writes a check against his or her account The customer is the principal and the bank is the agent The Collection Process: A bank is under a legal duty to accept deposits into a customer’s account This includes collecting checks that are drawn on other banks and made payable or indorsed to the depositor DRAWER >>>>>>> PAYEE >>>>>> METRO BANK >>>>>>> CITY BANK >>>>>>> (Depository/Collecting Bank) (Intermediary Bank) DRAWER’S BANK (“Drawee” or “Payor” Bank) Electronic Fund Transfer Systems: Electronic fund transfer systems (EFTS) are supported by contracts among and between customers, banks, private clearinghouses, and other third parties The most common forms of EFTS are: 1. Automated Teller Machines (ATM)
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