Which of the following is the most likely result if Mehdi attempts to require that the bank reimburse him for the value of the check cashed by Caileen?
A) The check was an order instrument, and the bank must take the loss because it should only have provided funds to Mehdi.
B) Because the check was an order instrument, the bank was within its rights to pay Caileen because she presented the check; and Mehdi has no rights against the bank.
C) Because the check was a bearer instrument, the bank must take the loss because it should only have provided the funds to Mehdi.
D) Because the check was a bearer instrument, the bank was authorized to pay Caileen; and Mehdi has no rights against the bank.
E) Regardless of what type of instrument the check was, the bank had no right to cash the check when presented by Caileen unless the bank can establish by a preponderance of the evidence that Caileen misrepresented herself as an agent of Mehdi.

Question

Quizplus · Accepted Answer

Checks are typically considered bearer instruments unless specifically endorsed otherwise. This means that the bank is authorized to pay whoever presents the check, and the original issuer of the check (Mehdi, in this case) would not have recourse against the bank for cashing the check when presented by another party (Caileen).

Which of the Following Is the Most Likely Result If