Asked by Jaden Snell on Jul 26, 2024
Verified
Zachary,who has been authorized to write a check from a company account to pay employees,draws bonus checks from the company account for five imaginary employees; he then endorses the checks in their names and deposits the checks into his own bank account.Which of the following is true regarding whether the company will be required to take the loss on the checks?
A) Under the fictitious payee rule,the company will be required to take the loss on the checks unless the company can obtain the funds from Zachary.
B) Under the imposter rule,the company will be required to take the loss on the checks unless the company can obtain the funds from Zachary.
C) Under the transferor rule,the company will be required to take the loss on the checks unless the company can obtain the funds from Zachary.
D) Under the employee-liability rule,the company will be able to recover from any bank that cashed the check in addition to Zachary.
E) Under the Banking Liability Enhancement Act of 2009,the company will be able to recover from any bank that cashed the check in addition to Zachary.
Fictitious Payee Rule
A legal principle stating that if a negotiable instrument is issued to a fictitious payee, it may be treated as payable to bearer, affecting endorsement requirements.
Imposter Rule
A rule that holds that if one obtains a negotiable instrument by impersonating another and endorses it with the impersonated party’s signature, the loss falls on the drawer of the instrument.
- Becoming familiar with the legal results and standard precedents pertinent to fraud activities and the use of unauthorized signatures on documents of negotiability.
Verified Answer
Learning Objectives
- Becoming familiar with the legal results and standard precedents pertinent to fraud activities and the use of unauthorized signatures on documents of negotiability.
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