[Check Issues] Kelsey Owns and Operates a Currency Exchange

question 41

Multiple Choice

[Check Issues] Kelsey owns and operates a currency exchange. A regular customer, Rafe, comes in and cashes a $2,000 check issued by ABC Trucking. The day after Kelsey cashed the check, she received a notice from ABC Trucking that some checks had been stolen. It was later discovered that the checks she cashed for Rafe had been stolen. At the time she took the check, Kelsey was very busy with several customers in line. She simply glanced at the check and cashed it. A reasonable examination would have revealed that the check had been materially altered and changed from the amount of $200 to $2,000. Kelsey decided that she needed to hire some people to help her because she also had a problem with another check. On the same day that she took Rafe's check, she took a check from another customer, Brett. It was later discovered that the check, which was four months old, was the subject of a dispute between Brett and the issuer of the check for whom Brett had done some work. The issuer claimed that the work was improperly done. Both ABC Trucking and the issuer of the check to Brett had stopped payment on the checks. Kelsey claimed that as a holder in due course, she was entitled to payment on both checks.
-What is the effect of Kelsey receiving notice the day after she cashed the check for Rafe that the check had been stolen?

• A) The notice has no effect on her status as holder in due course because it was provided after she cashed the check.
• B) The notice prevents her from being a holder in due course.
• C) The notice prevents her from being a holder in due course only if Rafe had been convicted of check cashing offenses in the past since she should have checked his criminal record.
• D) The notice prevents her from being a holder in due course only if she subjectively knew that Rafe had been charged criminally with check cashing violations in the past.
• E) The notice prevents her from being a holder in due course because it was presented to a business; only individuals can avoid the effect of notice of theft by cashing a check prior to receiving notice.

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Definitions:

Trait Approaches

Trait approaches in psychology propose that individual personalities are composed of broad dispositions, and that these traits influence behavior.

Behavioral Leadership Approaches

Theories focusing on the observable behaviors of leaders and how these behaviors influence their effectiveness in guiding and motivating others.

Administrative Leadership Approaches

Methods or strategies used by leaders in organizational settings to influence and direct the management and administration processes.

Supportive Leadership

A leadership style that emphasizes support, encouragement, and empowerment of employees to achieve organizational goals.