Business law

An imposter is someone who impersonates a payee and induces the maker or drawer to issue an instrument in the payees name and give the instrument to the imposter. If the imposter forges the indorsement of the named payee, the drawer or maker is liable on the instrument to any person who, in good faith, pays the instrument or takes it for value or for collection [UCC 3-404(a)]. This rule is called the imposter rule. example Fred purchases goods by telephone from Cynthia. Fred has never met Cynthia. Beverly goes to Fred and pretends to be Cynthia. Fred draws a check payable to the order of Cynthia and gives the check to Beverly, believing her to be Cynthia. Beverly forges Cynthias indorsement and cashes the check at a liquor store. Under the imposter rule, Fred is liable and the liquor store is not because Fred was in the best position to have prevented the forged indorsement.

ethics Questions Does an imposter act ethically? What is the public policy underlying the imposter rule?