§6A-3-405  Employer's responsibility for fraudulent indorsement by employee. –


Published: 2015

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TITLE 6A

Uniform Commercial Code

CHAPTER 6A-3

Negotiable Instruments

PART 6A-3-401

Liability of Parties

SECTION 6A-3-405



   § 6A-3-405  Employer's responsibility for

fraudulent indorsement by employee. –

(a) In this section:



   (1) "Employee" includes an independent contractor and

employee of an independent contractor retained by the employer.



   (2) "Fraudulent indorsement" means (i) in the case of an

instrument payable to the employer, a forged indorsement purporting to be that

of the employer, or (ii) in the case of an instrument with respect to which the

employer is the issuer, a forged indorsement purporting to be that of the

person identified as payee.



   (3) "Responsibility" with respect to instruments means

authority (i) to sign or indorse instruments on behalf of the employer, (ii) to

process instruments received by the employer for bookkeeping purposes, for

deposit to an account, or for other disposition, (iii) to prepare or process

instruments for issue in the name of the employer, (iv) to supply information

determining the names or addresses of payees of instruments to be issued in the

name of the employer, (v) to control the disposition of instruments to be

issued in the name of the employer, or (vi) to act otherwise with respect to

instruments in a responsible capacity. "Responsibility" does not include

authority that merely allows an employee to have access to instruments or blank

or incomplete instrument forms that are being stored or transported or are part

of incoming or outgoing mail, or similar access.



   (b) For the purpose of determining the rights and liabilities

of a person who, in good faith, pays an instrument or takes it for value or for

collection, if an employer entrusted an employee with responsibility with

respect to the instrument and the employee or a person acting in concert with

the employee makes a fraudulent indorsement of the instrument, the indorsement

is effective as the indorsement of the person to whom the instrument is payable

if it is made in the name of that person. If the person paying the instrument

or taking it for value or for collection fails to exercise ordinary care in

paying or taking the instrument and that failure substantially contributes to

loss resulting from the fraud, the person bearing the loss may recover from the

person failing to exercise ordinary care to the extent the failure to exercise

ordinary care contributed to the loss.



   (c) Under subsection (b), an indorsement is made in the name

of the person to whom an instrument is payable if (i) it is made in a name

substantially similar to the name of that person or (ii) the instrument,

whether or not indorsed, is deposited in a depositary bank to an account in a

name substantially similar to the name of that person.



History of Section.

(P.L. 2000, ch. 238, § 3; P.L. 2000, ch. 421, § 3.)

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