Which of the following is the most likely result if an agent admits to the principal that a check for the principal was forged by the agent and placed into the agent's bank account, but the principal does nothing until two months later after the agent leaves town with the funds?

A) Because the checks were forged, the principal can receive reimbursement of the funds from any maker involved or any bank that cashed the checks.
B) The principal can receive reimbursement from makers of the checks only.
C) The principal can receive reimbursement from any bank that cashed the checks only.
D) It is likely that it will be determined that the principal ratified the signatures and that the principal cannot recover from either makers or banks that cashed the checks.
E) The principal can recover from either the makers or any banks who cashed the checks only if it can be shown that the agent cannot be located for criminal prosecution.

Question

Vanika kapoor · Accepted Answer

Final Answer : D, Explanation :  The principal's inaction for two months after discovering the forgery and the agent's misappropriation of funds could be interpreted as ratification of the agent's actions, making it difficult for the principal to recover the funds from the makers of the checks or the banks that cashed them.

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