Posted: 17 Dec 2011 at 19:35 | IP Logged
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I am studying commercial paper part and found there are 2 questions seem similar but the answers are contrary with mine. Could anyone help me to explain it?
1. Teff entered Archer's office and stole from Archer some radios and Archer's wallet containing identification. Subsequently, representing himself as Archer, Teff induced Bane to purchase one of the stolen radios for a fair price. Bane gave Teff his chec mad out"Pay to the order of Archer." Teff endorsed the check "Pay to the order of Crown, Archer" and transferred it to Crown fro cash in the amount of the check. Crown endorsed the check"Pay to the order of Fox, Crown" and transferred the check to Fox to be applied to his account. Bane's check was
The answer is "Order papaer initially and negotiated by Teff to Crown"
2.Klep stole several negotiable warehouse recipts, which were deliverable to the order of Apple from the premises of Store. Klep enorsed Store's name on the instruments and transferred them to Margo, a bona fide purchaser for value. As between Store and Margo,
The answer is " Store will prevail because Klep's endorsement prevents negotiation."
I know the rules are If the unauthorized signature is of an endorsement, negotiation cannot occur. However, if the forgery is of a drawer's or maker's, negotiation can occur.
For the first question, I think it is forgery of endorsement so cannot negotiation and second question is forgery of drawer that can negotiate, but the answers are on the contrary.
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