Sarah has a checking account at First Bank.Orrin steals one of her blank checks,writes a check for $250,and then forges Sarah's signature.He then presents the check to First Bank for payment.First Bank pays the forged instrument.Which of the following statements is correct?
A)First Bank will have to recredit the $250 to Sarah's account if she so requests.
B)Orrin is responsible to First Bank for the $250.
C)Sarah is primarily liable on the check even if she did not sign it and was not negligent in allowing Orrin to take the blank check.
D)Two of the above, (a) and (b), are correct.

Question

Quizplus · Accepted Answer

Option A is correct because Sarah did not authorize the check or sign it, and it was forged. Therefore, she can request that the bank recredit her account for the amount of the forged check.
Option B is correct because Orrin committed check fraud and is responsible for paying back the $250 to First Bank.
Option C is incorrect because Sarah is not personally liable for the forgery committed by Orrin. However, if Sarah was negligent in safeguarding her checkbook, she could be held partially liable for the loss.

Sarah Has a Checking Account at First Bank