Asked by Shiva Ghahramani on Jun 26, 2024
Verified
Daisy signs a check "pay to the order of Ewan" drawn on Daisy's account in Finance Bank. Graham forges Ewan's indorsement. Finance Bank pays the check. Most likely
A) Daisy will be liable for the amount.
B) Ewan will have to pay Daisy for the amount.
C) Finance Bank will have to recredit Daisy's account.
D) the Federal Reserve will reimburse all parties for their costs.
Indorsement
An endorsement, in a financial context, refers to the act of signing the back of a negotiable instrument, which allows for the legal transfer of the instrument’s ownership. If "Indorsement" was misspelled and meant to signify a general approval or support, the term is not accurate.
Reimburse
To pay back or compensate for expenses incurred or losses sustained.
Liable
Being legally responsible for something, typically involving financial compensation or reparations.
- Recognize the legal consequences of forged checks and who bears the financial responsibility in various scenarios.
Verified Answer
AP
Anthony PreziosioJul 02, 2024
Final Answer :
C
Explanation :
Finance Bank will have to recredit Daisy's account because it is the bank's responsibility to verify the authenticity of endorsements on checks drawn on its accounts. When the bank pays out on a forged endorsement, it typically must bear the loss and recredit the account of the person who wrote the check, in this case, Daisy.
Learning Objectives
- Recognize the legal consequences of forged checks and who bears the financial responsibility in various scenarios.