25-1Copyright © 2004 by Nelson, a division of Thomson Canada Limited
CANADIAN BUSINESSCANADIAN BUSINESS
$orothy $%plessis
!teven #nman
!hannon &'(yrne
!ally )%n*
+resentation prepared by+resentation prepared by
 
25-2Copyright © 2004 by Nelson, a division of Thomson Canada Limited
CHAPTER TWENTY-FIVECHAPTER TWENTY-FIVE
OBJECTIVES:
%a") 
"#tr',e"t#
%a")"*
25-.Copyright © 2004 by Nelson, a division of Thomson Canada Limited
THE BANKING RELATIONSHIPTHE BANKING RELATIONSHIP
REGULATION OF BANKS
 Bank Act  0 the ,a" $'r$!#e # t! e"#'re
the #ta%lt1 a"( l2'(t1 !+ %a")# a"( t!
(e"t+1 a"( re*'late the t1$e# !+ %'#"e##
the1 are $er,tte( t! !"('t
 
25-4Copyright © 2004 by Nelson, a division of Thomson Canada Limited
THE BANK-CUSTO3ERTHE BANK-CUSTO3ER
AGREE3ENTAGREE3ENT
BANKING AGREE3ENT a !"trat that #$e+e# the r*ht# a"(
!%l*at!"# !+ a %a") a"( a '#t!,er
$'r$!#e !+ the %a")"* a*ree,e"t
t! #$e+1 &h! ha# the a'th!rt1 t! ##'e "#tr't!"# t! the %a") !" %ehal+ !+ the '#t!,er
 
25-5Copyright © 2004 by Nelson, a division of Thomson Canada Limited
DUTIES OF THE BANK AND THEDUTIES OF THE BANK AND THE
CUSTO3ER CUSTO3ER 
BANKING CONTRACT
!llet he2'e# +!r the '#t!,er
$r!.(e a!'"t "+!r,at!" t! the '#t!,er !"
a re*'lar %a##
 
25-/Copyright © 2004 by Nelson, a division of Thomson Canada Limited
DUTIES OF THE BANK AND THEDUTIES OF THE BANK AND THE
CUSTO3ER CUSTO3ER 
*.e "#tr't!"# t! the %a") " !r(er t!
$re.e"t +ra'( a"( +!r*er1
)ee$ a'th!r6at!"# 'rre"t
$r!.(e #a+e*'ar(# +!r eletr!"
!,,'"at!"# 7"l'("* tele$h!"e8 +a98
a"( !,$'ter
 
25-Copyright © 2004 by Nelson, a division of Thomson Canada Limited
DUTIES OF THE BANK AND THEDUTIES OF THE BANK AND THE
CUSTO3ER CUSTO3ER 
3ONEY LAUNDERING
at.t1 a# "!,e +r!, le*t,ate %'#"e##
Pr!ee(# !+ Cr,e %ll 0 re2're# %a")# t!
.er+1 (e"tt1 !+ '#t!,er#8 .er+1 that
'#t!,er# are e"*a*e( " .al( %'#"e##
at.te#8 a"( t! (eter,"e the #!'re !+
tra"#+er# e9ee("* ;<=8===
Continued...
 
25-Copyright © 2004 by Nelson, a division of Thomson Canada Limited
DUTIES OF THE BANK AND THEDUTIES OF THE BANK AND THE
CUSTO3ER CUSTO3ER 
3ONEY LAUNDERING
,a"(at!r1 re$!rt"* #1#te, " &hh
%a")#8 tr'#t !,$a"e#8 "#'ra"e
!,$a"e#8 a"( $r!+e##!"al# ,'#t re$!rt t!
a "e& "(e$e"(e"t %!(1 7F"a"al
Tra"#at!"# a"( Re$!rt# A"al1## Ce"tre
7FINTRAC a"1 #'#$!'# +"a"al
'rre"1 tra"#+er#
 
25-Copyright © 2004 by Nelson, a division of Thomson Canada Limited
THE BANK-CUSTO3ERTHE BANK-CUSTO3ER
$'rel1 that !+ the %a") a# (e%t!r a"( the
'#t!,er # re(t!r
+('ar1 relat!"#h$ e9#t#
 
25-10Copyright © 2004 by Nelson, a division of Thomson Canada Limited
NEGOTIABLE INSTRU3ENTSNEGOTIABLE INSTRU3ENTS
NEGOTIABLE INSTRU3ENT a &rtte" !"trat !"ta""* a"
'"!"(t!"al $r!,#e !r !r(er t! $a1 a #$e+ #', !" (e,a"( !r !" a #$e+e( (ate t! a #$e+ $er#!" !r %'#"e##
he2'e 0 &rtte" !r(er t! a %a") t! $a1 ,!"e1 t! a #$e+e( $er#!"
$r!,##!r1 "!te 0 a &rtte" $r!,#e t! $a1 a #$e+e( a,!'"t t! a"!ther $er#!"
 
25-11Copyright © 2004 by Nelson, a division of Thomson Canada Limited
STEPS IN THE CHE?UESTEPS IN THE CHE?UE
CIRCULATION PROCESSCIRCULATION PROCESS
 reat!r a"( (ra&er ##'e# he2'e t! #'$$ler 7$a1ee
#'$$ler (e$!#t# he2'e " t# %a") 
 #'$$ler5# %a") $lae# he2'e " #'$$ler5# a!'"t
thr!'*h the he2'e-lear"* $r!e##8 the
he2'e ,!.e# +r!, the #'$$ler5# %a") t! reat!r5#
%a") 7(ra&ee
tra"#+er# t! #'$$ler5# %a") 
#'$$ler5# %a") re!.er# t# +'"(#
Figure 25.2
25-12Copyright © 2004 by Nelson, a division of Thomson Canada Limited
I3PLICATIONS OF CREATING AI3PLICATIONS OF CREATING A
CHE?UECHE?UE
ISSUING A CHE?UE a" '"!"(t!"al $r!,#e t! $a1 the
#$e+e( #', t! a"1!"e &h! $re#e"t# the he2'e t! the %a") +!r $a1,e"t
h!l(er 0 a $er#!" &h! $re#e"t# a "e*!ta%le "#tr',e"t +!r $a1,e"t
 
25-1.Copyright © 2004 by Nelson, a division of Thomson Canada Limited
I3PLICATIONS OF CREATING AI3PLICATIONS OF CREATING A
CHE?UECHE?UE
HOLDER + the h!l(er ha# ate( " *!!( +ath there
are l,te( ar*',e"t# a reat!r a" '#e t!  /'#t+1 re+'#"* $a1,e"t
NEGOTIATION  the $r!e## !+ tra"#+err"* "e*!ta%le
"#tr',e"t# +r!, !"e $er#!" t! a"!ther
ENDORSE3ENT   the $r!e## !+ #*""* a "e*!ta%le
"#tr',e"t t! e"a%le "e*!tat!"
 
25-14Copyright © 2004 by Nelson, a division of Thomson Canada Limited
I3PLICATIONS OF ACCEPTING AI3PLICATIONS OF ACCEPTING A
CHE?UECHE?UE DELAY 
ae$t"* a he2'e # e2'.ale"t t! e9te"("* re(t #"e there are #e.eral (a1# %et&ee" ha"("* !.er *!!(# a"( ree."* $a1,e"t +r!, a he2'e
CERTIFICATION  the $r!e## &here%1 a %a") *'ara"tee# $a1,e"t
!+ a he2'e
STOP PAY3ENT 
 
25-15Copyright © 2004 by Nelson, a division of Thomson Canada Limited
ENDORSE3ENTSENDORSE3ENTS
"#tr't!"#
RESTRICTIVE ENDORSE3ENT
$art'lar %a") a!'"t
SPECIAL ENDORSE3ENT
#$e+ $er#!"
25-1/Copyright © 2004 by Nelson, a division of Thomson Canada Limited
ELECTRONIC BANKINGELECTRONIC BANKING
!,$'ter#8 tele$h!"e#8 !r !ther eletr!"
,ea"#
!"trat# 0 !"e %et&ee" the ##'er a"( the
'#er a"( the #e!"( %et&ee" the re(t ar(
!,$a"1 a"( the ,erha"t
 
25-1Copyright © 2004 by Nelson, a division of Thomson Canada Limited
ELECTRONIC BANKINGELECTRONIC BANKING
ha"*e( a"( e9$a"(e(
!.er"* the r#) !+ eletr!" tra"#at!"#
"ter"at!"al r'le# (e#*"e( t! (eal &th the
!%l*at!"# !+ the $arte#
 
25-1Copyright © 2004 by Nelson, a division of Thomson Canada Limited
TECHNOLOGY AND THE LAWTECHNOLOGY AND THE LAW
ELECTRONIC CASH AND PAY3ENT
(e%t ar(#8 eletr!" ,!"e18 (*tal a#h
@ le*al ##'e#
@ r#) !+ #1#te, ra#he#
 
25-1Copyright © 2004 by Nelson, a division of Thomson Canada Limited
3ETHODS OF PAY3ENT3ETHODS OF PAY3ENT
FOR3 OF PAY3ENT NATURE OF
PAY3ENT RISK FOR PERSON
 
%e +!r*e(
Figure 25.4 (continued…)
25-20Copyright © 2004 by Nelson, a division of Thomson Canada Limited
3ETHODS OF PAY3ENT3ETHODS OF PAY3ENT
FOR3 OF PAY3ENT NATURE OF
PAY3ENT RISK FOR PERSON
the (e%t!r ,a1
%e '"&ll"* t! $a1