What is a fictitious payee rule? As a rule, when the payee is fictitious or not intended to be the true recipient of the proceeds, the check is considered as a bearer instrument. A check
What is a fictitious payee rule?
As a rule, when the payee is fictitious or not intended to be the true recipient of the proceeds, the check is considered as a bearer instrument. A check that is payable to a specified payee is an order instrument.
Who is a fictitious person?
Legal Definition of fictitious person : a supposed but in fact nonexistent person referred to in some legal documents or proceedings also : fictitious payee.
Which of the following is a fictitious payee?
Fictitious payee rule is a principle of commercial law that if a drawer or maker issues commercial paper to a payee whom the drawer or maker does not actually intend to have any interest in the instrument, an ensuing forgery of the payee’s name will be effective to pass good title to later transferees.
What is fictitious instrument?
An instrument (usually a mortgage or deed of trust) which is recorded not on specific property but to be incorporated by reference into future mortgages or deeds of trust. The fictitious instrument contains general language applicable to any specific property. …
What is the imposter rule?
Under UNIFORM COMMERCIAL CODE , Article 3, Sect. 404(a), a rule stating that if an impostor endorses a negotiable instrument and receives payment in GOOD FAITH, the drawer of the instrument is responsible for the loss.
What does fictitious mean in law?
A fictitious name is an assumed name that differs from an individual’s actual name. A fictitious action is a lawsuit brought not for the adjudication of an actual controversy between the parties but merely for the purpose of obtaining the opinion of the court on a particular point of law.
What is the effect of a promissory note payable to a fictitious person?
– An instrument payable to a fictitious person is treated as a bearer instrument because a fictitious person is incapable of indorsing and has no right to the instrument because the person never existed and the maker or drawer has knowledge thereof. 10.
What are the types of bill of exchange?
From the accounting point of view, Bills of exchange are of two types:
- Trade bill: Where the bill of exchange is drawn and accepted to settle a trade transaction, it is called Trade bill.
- Accommodation bill: Where a bill of exchange is drawn and accepted for mutual help, it is called Accommodation bill.
What is an inchoate instrument?
Inchoate Instrument means an incomplete instrument. The drawer/ maker/ acceptor/ endorser of a negotiable instrument may sign and deliver the instrument to another person in his such capacity leaving the instrument, either wholly blank or having written on it the word ‘incomplete.
What is an unaccepted draft?
Primary tabs (b) A draft may be accepted although it has not been signed by the drawer, is otherwise incomplete, is overdue, or has been dishonored.
What is a holder in due course of a negotiable instrument?
In commercial law, a holder in due course is someone who takes a negotiable instrument in a value-for-value exchange without reason to doubt its legitimacy. A holder in due course acquires the right to make a claim for the instrument’s value against its originator and intermediate holders.