The rationale for the fictitious payee rule is that:
A)the bank should bear the immediate loss of the forged instruments.
B)the holder in due course should bear the immediate loss of the forged instruments.
C)the employer of the wrongdoer should bear the immediate loss of forged instruments.
D)the wrongdoer should bear the immediate loss of the forged instruments.

Question

Quizplus · Accepted Answer

The rationale for the fictitious payee rule is similar to that for the impostor rule.If someone has a dishonest employee or agent who is responsible for the forgery of some checks,the employer of the wrongdoer should bear the immediate loss of those checks rather than some other innocent party.In turn,the employer must locate the unfaithful employee or agent and try to recover from him.

The Rationale for the Fictitious Payee Rule Is That