Quincy signs a check payable to Regal Investors, Inc., and gives it to Regal, leaving the amount blank but authorizing Regal to fill in the check for $1,000. Regal fills in $1,500 and negotiates the check to State Bank, to whom Regal owes $1,500. State Bank, an HDC, can enforce the check for

Question

Quizplus · Accepted Answer

Since Quincy authorized Regal to fill in the amount, Regal had authority to do so. However, by filling in $1,500, Regal exceeded Quincy's authorization, making it a material alteration. Normally, this would mean that State Bank, as a HDC, could only enforce the check for the original amount authorized by Quincy ($1,000). However, because Regal owed State Bank the exact amount of the altered check ($1,500), State Bank can enforce the check for the full amount under the rule of "discharge for value." Therefore, State Bank can enforce the check for $1,500.

Quincy Signs a Check Payable to Regal Investors, Inc