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Business Law and the Regulation of Business 11th Edition by Richard Mann, Barry Roberts
Edition 11ISBN: 978-1133587576Business Law and the Regulation of Business 11th Edition by Richard Mann, Barry Roberts
Edition 11ISBN: 978-1133587576 Exercise 2
Who Gets to Pass the Buck on a Forged Indorsement?
FACTS Tom West goes to Libertyville Currency Exchange to cash a check for $3,525. The check belongs to West's friend, John Reston, who accompanies him. The check is a certified check drawn on NationsBank and made payable to the order of ''Piscitello Enterprises, Inc.'' and indorsed on the reverse side by ''Joe Piscitello.''
Because West often transacts business at the currency exchange, the clerk, Rita Bosworth, recognizes him as soon as he walks in. West indorses the check and hands it to Bosworth, who dispenses the cash. West immediately turns to Reston, giving him some money.
Later, Libertyville Currency Exchange deposits the check with First National Bank, which eventually files a claim against the currency exchange because the indorsement ''Joe Piscitello'' has been forged. The currency exchange pays the claim, then brings an action against West.
During the trial, Bosworth testifies that she saw Reston hand some money back to West when the two men turned away from her. West vehemently denies this. He says that he received no money in exchange for helping Reston.
Libertyville Currency Exchange claims that West breached his warranty of good title under the transferor's warranty by obtaining payment for a check on which the payee's indorsement was forged. West, on the other hand, argues that he signed the check to lend his name to another party and that he is thus an accommodation party. He maintains that he is not liable to Libertyville Currency Exchange because NationsBank did not give him timely notice that the signature on the check was forged and also because the Currency Exchange paid the check, thus releasing him from liability as an accommodation indorser.
Social, Policy, and Ethical Considerations
What issues relating to the transfer of a negotiable instrument are involved here? What liability does the bank face? What liability does Tom West face? What warranties apply to each party?
FACTS Tom West goes to Libertyville Currency Exchange to cash a check for $3,525. The check belongs to West's friend, John Reston, who accompanies him. The check is a certified check drawn on NationsBank and made payable to the order of ''Piscitello Enterprises, Inc.'' and indorsed on the reverse side by ''Joe Piscitello.''
Because West often transacts business at the currency exchange, the clerk, Rita Bosworth, recognizes him as soon as he walks in. West indorses the check and hands it to Bosworth, who dispenses the cash. West immediately turns to Reston, giving him some money.
Later, Libertyville Currency Exchange deposits the check with First National Bank, which eventually files a claim against the currency exchange because the indorsement ''Joe Piscitello'' has been forged. The currency exchange pays the claim, then brings an action against West.
During the trial, Bosworth testifies that she saw Reston hand some money back to West when the two men turned away from her. West vehemently denies this. He says that he received no money in exchange for helping Reston.
Libertyville Currency Exchange claims that West breached his warranty of good title under the transferor's warranty by obtaining payment for a check on which the payee's indorsement was forged. West, on the other hand, argues that he signed the check to lend his name to another party and that he is thus an accommodation party. He maintains that he is not liable to Libertyville Currency Exchange because NationsBank did not give him timely notice that the signature on the check was forged and also because the Currency Exchange paid the check, thus releasing him from liability as an accommodation indorser.
Social, Policy, and Ethical Considerations
What issues relating to the transfer of a negotiable instrument are involved here? What liability does the bank face? What liability does Tom West face? What warranties apply to each party?
Explanation
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Case summary:
A check was issued to P e...
Business Law and the Regulation of Business 11th Edition by Richard Mann, Barry Roberts
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