The Effect of the Fictitious Payee Rule Is That

question 63

Multiple Choice

The effect of the fictitious payee rule is that:

• A) fictitious payees are entitled to collect on instruments.
• B) the maker or drawer will be liable for payment of an instrument naming a fictitious payee.
• C) makers and drawers are protected from liability resulting from paying an instrument naming a fictitious payee.
• D) parties forging the signature of a fictitious payee can be liable for losses incurred by the forgery.
• E) banks are required to positively identify any holder seeking payment at the bank on an instrument.

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