Unauthorized Signatures and Imposters

Question 1

Instruments issued to imposters (Drawer gets duped)

Answer 1

(Issuer may still be liable)

If an imposter induces the issuer to issue an instrument to the imposter, an indorsement of that instrument by any person in the name of the payee is effective as the payee’s valid indorsement

Question 2

Instruments payable to fictitous or unintended payees (when good employees go bad)

Answer 2

If a person whose intent determines to whom an instrument is payable and that person;

Does not intended for the payee to have any interest in the instrument or the payee if fictitious,

Then any person in possession of the instrument is the instruments holder and an indorsement in the name of the stated payee may be effective as the payees indorsement

Question 3

(When employee indorses incoming checks)

Answer 3

An employee entrusted with check writing privileges for indorsement. The employer will bear the risk of loss

Question 4

Benefited parties

Answer 4

These are the parties who take the instruments mentioned above. These parties are usually banks or good faith purchasers for value. If these parties fail to exercise ordinary care in taking the instruments and that failure substantially contributes to loss resulting from payment of the instrument, the person bearing the loss may recover from the person failing to exercise ordinary care to the extent the failure to exercise ordinary case contributed to the loss.