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, if Sarah was not found to be negligent.
B) Sarah is primarily liable if she was negligent in allowing Orrin to take the blank check.
C) Orrin is responsible to First Bank for the $250.
D) All of these.

Question

Quizplus · Accepted Answer

First Bank must recredit Sarah's account if she was not negligent (A). Sarah could be considered liable if her negligence led to the theft (B). Orrin, having forged the check, is directly responsible to First Bank for the fraudulent act (C). Therefore, all statements are correct.

Sarah Has a Checking Account at First Bank