Under Article 3, the loss when a depository bank pays on an instrument to a fictitious payee falls exclusively on the account holder.

Question

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Article 3 of the Uniform Commercial Code (UCC) states that the loss for a payment made to a fictitious payee may fall on the drawer or maker if they were negligent, but it does not automatically fall exclusively on the account holder.

Under Article 3, the Loss When a Depository Bank Pays