Exam 28: Transfers of Negotiable Instruments and Warranties of Parties

If a negotiable order instrument is transferred to another party without an indorsement,the instrument has been:

Negotiation of bearer paper requires:

When a negotiable instrument is negotiated by delivery without indorsement,the warranty liability of the transferor runs:

Negotiation of order paper requires:

The warranty liability of a qualified indorser is the same as that of an unqualified indorser.

A special indorsement consists of the signature of the indorser and words identifying the indorsee.

A holder is also known as an assignee of the paper

Clark is the senior payroll clerk for Gonzalez Corporation.When preparing the weekly payroll,Clark added the name of Simmons,a fictitious employee,to the payroll list.Lewis,the treasurer of the corporation,signed the payroll checks and delivered them to Clark.Clark distributed checks to the correct employees and kept the one made payable to the order of Simmons.Clark indorsed the name of Simmons to the check,cashed it at Diamond Check Cashing.In this situation:

If an instrument bears a restrictive indorsement,any further transfer or negotiation is effectively barred.

A forged or unauthorized indorsement is by definition:

The words "without recourse" on an indorsement means the indorser is:

An indorsement "Pay to Donald Hames,Cathy Dukes" is not a valid indorsement because it does not contain the words "order" or "bearer."

Under the UCC,a negotiation is not effective when it is made by a minor or any other person lacking capacity.

Bearer paper may only be negotiated by the actual transfer of possession of the instrument.

Which of the following is true of warranties of indorsers?

Al was a well-respected attorney in a small town.A couple retained Al to represent them on the purchase of a home.Before closing,Al informed the couple of payments that they were required to make by check at the closing.Among the required payments the attorney told the couple to make were a check for $1,500 to Bob Brown and a check for $610 to Susan Lee.The attorney explained that the check to Brown was for a survey of the property and the check to Lee was for termite control work that the couple had authorized.??The checks were issued and taken by Al who promised to deliver them.Al did not,however,deliver them.Instead,Al forged the indorsements of the respective payees and cashed the checks.When Al was later arrested on a similar matter,the couple learned what had happened.??The couple made a claim against its bank for reimbursement,claiming the bank was not authorized to pay these checks because they had not been effectively negotiated to the bank.When the facts came to light,no person named Bob Brown had done a survey on the property,but the termite work had been done by Lee.Decide both cases.