Exam 29: Transfers of Negotiable Instruments and Warranties of Parties

If a lost instrument is order paper, the finder __________.

A restrictive endorsement specifies the purpose of the endorsement or the use to be made of the paper.

When a special endorsement is made, the instrument becomes order paper and may be negotiated only by an endorsement and delivery.

To enforce an implied warranty of an indorser, the party claiming under the warranty must give the indorser notice of the breach within fourteen (14) days after the claimant learns or has reason to know of the breach and the identity of the indorser.

A payee or endorsee whose name is misspelled may endorse the wrong name, the correct name, or both.

Endorsements may be classified in terms of whether the indorser has added any words to the endorsement and what those words are.

A blank endorsement indicates the person to whom the instrument is to be paid-that is, the transferee.

A forged or unauthorized endorsement is by definition:

When the indorser merely signs a negotiable instrument, the indorsement is called a __________ indorsement.

If a lost negotiable instrument is in bearer form at the time of the loss, the finder is entitled to enforce payment.

A restrictive indorsement reduces the risk of theft or unauthorized transfer by eliminating the bearer quality of a blank indorsement.

Sue is an employee at an ABC store. One of Sue's duties is to prepare the bank deposit at the end of the business day. Sue had a very busy day and made a few mistakes. All of the checks, except two, were endorsed with the stamp "ABC, Inc." that ABC had provided. The bank received the deposit and noticed the lack of endorsement on the two checks. In addition, three of the checks that Sue was to include with the deposit were lost in the parking lot after closing. Phil found the checks and deposited them into his personal account. What is the effect of ABC's endorsement on the lost checks and the lack of endorsement on the two deposited checks?