Check Kiting Has Been a Means, Although Neither an Ethical

question 62

Essay

Check kiting has been a means, although neither an ethical nor legal means, of allowing a firm to use its uncollected cash. How did the Check Clearing Act for the 21st Century (Check 21) affect this practice?

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Definitions:

Indorser

In finance, someone who signs a negotiable instrument, such as a check or promissory note, over to someone else, thereby transferring the rights of that document.

Primarily Liable

The condition of being initially and directly responsible for fulfilling an obligation or debt, without shifting that responsibility to another party.

Negotiable Instrument

A written document guaranteeing the payment of a specific amount of money, either on demand or at a set time, with the payee's name mentioned.

UCC

Uniform Commercial Code; a set of laws that govern commercial transactions in the United States.