Asked by Fernando Oropeza on Jul 04, 2024
Verified
On the back of a check "payable to Huan," Huan signs her name and negotiates the item to Ito. To avoid liability on the item if it is later dishonored, Ito should
A) immediately indorse the check in blank.
B) make a copy of the check and place it in a secure location.
C) write, above Huan's signature, "Pay to Ito."
D) indorse the check "without recourse."
Dishonored
A term referring to a financial instrument, such as a check, that has been refused payment by the bank upon presentation.
Indorse
To sign the back of a financial instrument, thus transferring ownership or to endorse it.
- Determine the elements influencing a party's accountability regarding a negotiable instrument.
Verified Answer
ZK
Zybrea KnightJul 05, 2024
Final Answer :
D
Explanation :
Indorsing the check "without recourse" is a way for Ito to avoid liability if the check is dishonored. This type of endorsement means that Ito does not guarantee payment of the check to subsequent holders.
Learning Objectives
- Determine the elements influencing a party's accountability regarding a negotiable instrument.