Asked by grace kelly on May 01, 2024
Verified
If the drawee bank mistakenly paid a check with a forged or unauthorized drawer's signature on it:
A) the bank can recover the amount from the person whose name had been mentioned in the check albeit without authorization.
B) the bank can recover if it paid the check to a presenter who had taken the instrument in good faith and for value.
C) the bank cannot recover if it paid the check to a forger or unauthorized signer.
D) the bank cannot recover it if the presenter had taken the instrument in good faith and for value.
Forged
Refers to the illegal creation, alteration, or imitation of documents, signatures, or objects with the intent to deceive.
Unauthorized Drawer's Signature
A signature on a financial or legal document that was made without the consent or authorization of the person purported to have signed.
Recover
To obtain a return of something or to gain restitution through legal processes, such as obtaining damages after a court judgment.
- Understand the implications of altered or forged negotiable instruments and the protections available to holders in due course.
Verified Answer
ZK
Zybrea KnightMay 05, 2024
Final Answer :
D
Explanation :
If the drawee bank mistakenly paid a check over a stop-payment order,paid a check with a forged or unauthorized drawer's signature on it,or paid despite the lack of sufficient funds in the drawer's account to cover the check,the bank cannot recover if it paid the check to a presenter who had taken the instrument in good faith and for value.In that case,the drawee bank would have to pursue someone else,such as the forger or unauthorized signer,or seller whose goods proved to be defective.
Learning Objectives
- Understand the implications of altered or forged negotiable instruments and the protections available to holders in due course.