A bank that pays a customer's check bearing a forged indorsement is obligated to recredit the customer's account.

Question

Quizplus · Accepted Answer

The bank is responsible for verifying the validity of an indorsement before paying a check. If the bank pays a check with a forged indorsement, it breaches its duty to the customer and must recredit the account. This is established by the Uniform Commercial Code (UCC), which governs various aspects of commercial transactions, including checks.

A Bank That Pays a Customer's Check Bearing a Forged