[House Painting] Graciela Reyes Signed a Check Agreeing to Pay

question 61

Multiple Choice

[House Painting] Graciela Reyes signed a check agreeing to pay, "Annie Greene, Marney Harris," $1,000. The payment was for painting her house. A problem with the note was that it spelled Annie's last name, "Greene," whereas Annie spells it simply, "Green." Annie and Marney were having a disagreement regarding how to split up the funds for painting the house. Annie proceeded to sign the check on the back, "Annie Green," and presented it to Hiro Murakami to satisfy a debt that she owed him. Hiro Murakami endorsed the check on the back, "Hiro Murakami, without recourse," and gave it to his nephew, Nate, who took it to the bank for payment. Meanwhile, Graciela has stopped payment on the check because, following a rainstorm, all the paint on the house looked spotted. Marney is unhappy because she did not obtain any of the funds and stated that Annie could not legally endorse the instrument because it misspelled her name and also because she, Marney, did not sign it.
-What is the effect of the designation, "Hiro Murakami, without recourse?"

• A) It has no effect on any subsequent holder.
• B) It has no effect on anyone, including, but not limited to, any subsequent holder.
• C) It means that Hiro Murakami does not provide any guarantees to subsequent holders if the instrument is later dishonored.
• D) It means that Hiro Murakami is providing that any subsequent holder cannot be held liable.
• E) It means that Hiro Murakami is providing that neither he nor the person who transferred the instrument to him can be held further liable to any subsequent holder.

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Definitions:

Financial Markets

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Extraordinary Returns

Profits that significantly exceed the norm or benchmark, often due to unusual or rare events affecting the investment.

Net Present Values

The calculation that compares the value of all cash inflows and outflows of a project or investment using a discount rate to determine if it will yield a positive return.

Historical Record

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