1. Weston, the president of El Camino Tools, habitually leaves the payroll check
ID: 2731324 • Letter: 1
Question
1. Weston, the president of El Camino Tools, habitually leaves the payroll checks in the open. Ileana, an employee, forges Weston's signature on a check and cashes it. Weston
A. is not under any obligation to pay any party who may later acquire the check.
B. may be obligated to pay the check if the forgery cannot be detected on a reasonable inspection.
C. may be obligated to pay the check if his carelessness in leaving the checks in the open facilitated the forgery.
D. none of the above.
2. Kyle writes a check on his account at First State Bank to Lewis, a famous athlete. The person purporting to be Lewis is an imposter, however, named Mac. Mac indorses the check to Nora. First State Bank dishonors the check. Ultimately, the loss will fall on
First State Bank.
Kyle.
Lewis.
Nora.
3. Marty, an accountant for G & O Transport Incorporated, begins issuing company checks payable to nonexistent persons drawn on G & O's account at First National Bank. Marty indorses the checks and deposits them in his own account. G & O discovers the theft and demands that the bank recredit its account. G & O will likely
prevail, because Marty was not authorized to issue company checks to himself.
prevail, because the bank should not have paid checks issued to nonexistent persons.
not prevail, because the bank did not know that the checks were not to be paid.
not prevail, because G & O was in a better position than the bank to prevent the theft.
4. Lon gives Adam a $200 check as payment for a debt. Adam crudely raises the amount of the check to $1,200 and transfers it to Beta Computers for a new hard drive. Beta deposits the check in its City Bank account. Lon raises the defense of material alteration against payment of the check. Who is entitled to $1,200?
Adam only.
Beta and City Bank only.
Adam, Beta, and City Bank.
none of the above.
5. Mona, an employee of National Corporation (NC), is authorized to use a signed NC check to buy supplies. Mona fills out the check so that it states an amount $500 in excess of the purchase price and cashes it at Office Supply Store. When Office Supply Store presents the check for payment, it may recover
nothing.
the amount by which the check exceeded the price of the supplies.
the amount stated in the check.
the price of the supplies.
6. Aaron is the maker of a promissory note payable to Best Financial Corporation. Best is the drawer of a check payable to Commercial Properties Inc. Commercial indorses the check. Who is primarily liable?
Aaron on the note.
Best on the check.
Commercial on the check.
None of the above.
A.First State Bank.
B.Kyle.
C.Lewis.
D.Nora.
Explanation / Answer
1)Option C as his negligence caused the forgery
2)Option D.
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