Certified Regulatory Compliance Manager (CRCM) — Question 156

The sender's liability for warranties and indemnities that a Reserve Bank makes for a substitute check is subject to the following conditions and limitations
EXCEPT:

Answer options

• A. The sender of an original check is not liable for amounts paid by the Reserve Bank absent the sender's agreement to the contrary
• B. The sender's liability under Regulation CC is not altered by the Regulation J provisions
• C. Failure of sender to have authority to make the required warranties and agreements
• D. A sender of an electronic item that is not a substitute check is not liable for any amount paid by a Reserve Bank that is attributable to the Reserve Bank's own lack of good faith or failure to exercise ordinary care

Correct answer: C

Explanation

Option C is the correct answer because it states a condition that does not limit the sender's liability, whereas the other options detail specific conditions that establish the boundaries of liability. A sender may indeed be liable if they fail to provide the necessary authority, while the other options clarify circumstances under which liability is either retained or exempted.