Case Problem Analysis: Requirements for Negotiability

Mid$-$Pacific Tennis Courts $($MPTC$),$ a small family$-$held corporation, hired Leroy Jacob as a salesperson. Jacob devised a scheme to defraud MPTC$.$ Using MPTC customer leads, Jacob entered into contracts with potential customers to build tennis courts without informing MPTC$.$ Jacob accepted checks from potential customers made payable to MPTC$.$ Jacob then deposited those checks in his personal bank account with Peoples Bank & Trust Co$.($Peoples Bank$)$ without indorsement or permission by MPTC$.$ Jacob took the money and disappeared.

When MPTC learned of the fraud and discovered that the checks were accepted for deposit by Peoples Bank in Jacob$$s personal account, MPTC sued Peoples Bank to recover the amount of the checks in question. Did Peoples Bank properly accept the checks for deposit?

PLEASE JUST SELECT ONE OF THE BOLDED PHRASES FOR EACH FILL IN THE BLANK

The Uniform commercial Code $($UCC$)$ has the following requirements for instrument to be negotiable: the instrument must be in writing, the instrument must be payable to order of or to the bearer, the instrument must include an unconditional promise, the instrument must state a fixed amount of money, the instrument must be payable on demand, and the instrument must be signed by the payee $/$ the instrument must be signed by the maker of the drawer $/$ the instrument must state a variable amount of money $/$ the instrument must be oral $/$ the instrument must include a conditional order

A transfer of an order instrument requires the compensation $/$ indorsement $/$ documentation of the payee. An indorsement is a drawee guarantee $/$ signature on an instrument $/$ makers mark, which is typically placed in storage with a bank $/$ in the files of an attorney $/$ on the back of a check.

Generally, the purpose of an indorsement on an instrument is to state the business purpose for which the instrument is written $/$ confirm the name of the drawee $/$ transfer ownership rights of the instrument. The checks deposited by Jacob were $/$ were not indorsed by MPTC$.$ Therefore, Peoples Bank properly $/$ improperly accepted the checks for deposit.

What If the Facts Were Different?

Assume that Jacob convinced the potential customers to write checks out to him personally, rather than MPTC$.$ Jacob then signed the checks and deposited them with Peoples Bank. Peoples Bank had no notice of the fraud.

In this case, People's Bank $/$ MPTC $/$ Jacob $/$ the potential customer is the drawer, and the potential customer $/$ People's Bank $/$ MPTC $/$ Jacob is the payee.

MPTC$$s name does $/$ does not appear on the check. The checks are $/$ are not negotiable. Therefore, Peoples Bank properly $/$ improperly accepted the checks for deposit.