Asked by Alexia Keobangsy on Jul 20, 2024
Verified
The City mails Joe Marsh a refund check for overpayment of a parking ticket.Harold Finch steals the check from Marsh's mailbox,signs "Joe Marsh" on the back of the check,and cashes it at a grocery store.Is the grocery store a holder of the check?
A) Yes,because Finch indorsed the check.
B) Yes,because it is a holder in due course.
C) No,because Finch was not a holder and the check was not signed by Marsh.
D) No,because the check contained no indorsements.
Holder In Due Course
A party that has acquired a negotiable instrument in good faith for value and without notice of any defect or claim to it, thus having certain protections.
Indorsed
Refers to the act of signing one's name on the back of a check, contract, or other document to validate it or agree to its terms.
- Identify the requirements and legal implications for becoming a holder or holder in due course.
- Distinguish between personal and real defenses available against a holder in due course.
Verified Answer
AM
Astrid MorganJul 26, 2024
Final Answer :
C
Explanation :
The grocery store is not a holder of the check because its transferor,Finch,was not a holder and because it needs Marsh's signature to have a good chain of authorized indorsements.Marsh has to indorse the check in order for there to be a valid chain of indorsements.Finch's signature is not effective for this purpose because Marsh did not authorize him to sign Marsh's name to the check.
Learning Objectives
- Identify the requirements and legal implications for becoming a holder or holder in due course.
- Distinguish between personal and real defenses available against a holder in due course.