Asked by Taran Thiara on Jun 16, 2024
Verified
Mycha indorsed a check from her aunt by signing her name on the back, but she dropped it on the subway on the way to the bank. The check is now comparable to cash because it is a bearer instrument.
Bearer Instrument
A negotiable financial instrument that designates payment to whoever holds the instrument, not requiring ownership to be registered with the issuer.
Indorsed
The act of signing one's name on the back of a check or other negotiable instrument for the purpose of transferring rights or entitlements.
- Elucidate the variance between order paper and bearer paper and the processes for negotiating them.
Verified Answer
RE
Rossie EspinoJun 21, 2024
Final Answer :
True
Explanation :
Since Mycha endorsed the check by signing her name on the back without specifying a new payee, the check becomes a bearer instrument. This means whoever holds the check can cash it, similar to cash.
Learning Objectives
- Elucidate the variance between order paper and bearer paper and the processes for negotiating them.