Bill submits a time card for a non-existent employee.The employer issues the payroll check.Bill forges the indorsement and negotiates the check to Ted.Which of the following statements is true?
A)The loss from the forged check is borne by the holder in due course.
B)The check cannot be negotiated as it carries the signature of a non-existent person.
C)The employer has the right to refuse payment to Ted.
D)Ted submits the check to the employer and receives the face amount.

Question

Quizplus · Accepted Answer

The Code allows any indorsement in the name of the fictitious payee to be effective as the payee's indorsement in favor of any person that pays the instrument in good faith or takes it for value or for collection.

Bill Submits a Time Card for a Non-Existent Employee