Question

3.         Melania K. is in possession of a check signed and issued by Donald T. that says, “Pay to the order of Melania K. $5,000” and a note signed and issued by Donald T. that says, “I promise to pay to the order of Melania K. $5,000,000.” What must Melania do to negotiate these instruments to her friend Tom and make Tom a holder?

4.         A check is made payable to the order of Ima Student and has been signed “Ima Student” by Ima on the back. Ima delivers it to her friend Milly. Milly writes the words, “Pay to Milly Friend” above Ima Student’s signature on the back. Milly then accidentally loses the check and Teacher finds it. Define the categories of indorsements used on the back of the check and discuss whether there has been a negotiation to Teacher.

Answer 1

3. In order to negotiate these Instruments to Tom, Melania K must Endorse the same in Favour of Tom. By writing the words, Pay to Tom, Handed over to Tom etc. Unless the control is transferred by writing, merely being the holder of such instruments can not get the right to Encash those cheques.

4. As the Check is delivered by Ima to her Friend Milly, Ima has only signed it, such endorsement is Blank Endorsement where it becomes a bearer instrument, and beared is able to encash it. Now, her friend milly being the holder is entitled to encash it.

Second option, Pay to Milly Friend, here milly has Made Endorsement in full or special endorsement so now check can be encashed only by Milly friend or by her milly friend's order.

Third option, now as the teacher has accidentally find it, and teacher does not have any instruction to pay check in His favor, now teacher can not encash it and it should be returned.