Dental Clinic agent Emma is authorized to write checks on the clinic's account in Finance Bank. Pharma Corporation is a clinic supplier. Emma writes a check on the clinc's account "pay to the order of Pharma [signed] Emma," indorses it in Pharma's name, and deposits it in her own account at Third Bank. If the bank collects payment, the ultimate party most likely to suffer the loss is

Question

Dental Clinic agent Emma is authorized to write checks on the clinic's account in Finance Bank. Pharma Corporation is a clinic supplier. Emma writes a check on the clinc's account "pay to the order of Pharma [signed] Emma," indorses it in Pharma's name, and deposits it in her own account at Third Bank. If the bank collects payment, the ultimate party most likely to suffer the loss is​

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Emma forged the check and deposited it in her own account, therefore committing fraud. The Dental Clinic will suffer the loss as their account was used without authorization. Finance Bank may also suffer some loss if they were found to be negligent in allowing Emma to write checks without proper authorization. Pharma may have lost out on the promised payment, but they are not liable for the fraudulent activity.

Dental Clinic Agent Emma Is Authorized to Write Checks on the Clinic's