In the case of a check, when the impostor rule applies:
A) the drawer of the check can successfully raise the defense of the forged indorsement.
B) the forged indorsement is effective to negotiate the instrument.
C) the forged indorsement is ineffective to negotiate the instrument.
D) the instrument becomes nonnegotiable.

Question

Quizplus · Accepted Answer

The impostor rule applies when the drawer is deceived into issuing a check to an impostor. In such cases, the forged indorsement by the impostor is considered effective to negotiate the instrument, making the drawer liable.

In the Case of a Check, When the Impostor Rule