Discount Retail Warehouse Corporation pays its employees every two weeks. Ethel, a Discount Retail employee, receives her paycheck and indorses the back ("Ethel Smith"), but loses the check before cashing it or depositing it. Garth finds it. Has the
check been nego¬tiated to Garth? If Garth signs the back of the check beneath Ethel's signature, can he cash it?If so, what might Ethel have done to avoid the loss?
Ethel's paycheck was negotiated to Garth. Ethel's blank in¬dorse-ment on the back of the check converted it from an order instru¬ment to a bearer instrument. A bearer instrument can be nego¬tiated by delivery alone. Delivery occurred when Garth found the check.
To have avoided the loss that Ethel suffered, she might have been more careful with the check, or at least not signed it until she was at a bank or elsewhere to cash or deposit it. Also, her indorsement might have included on the back of the check the words "For deposit only.". In that circumstance, Garth would have been unable to le¬gitimately cash the check.
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