Frank writes a check for $200. Galvin steals the check, alters to amount to $2,000 and
negotiates the check to Helen, who takes it in good faith, for value and without notice of the
alteration. When Helen attempts to recover on the check, Frank refuses to pay more than
the check’s original amount of $200. If Helen sues Frank, what will she recover based on
the UCC?
In the event that Helen sues Frank, she will be able to recover the original amount on the
check valued at $200 [section 3-407 (c) (ii)]. This is because the check was fraudulently
modified and could only be enforced based on its initial terms (Twomey, Jennings & Greene,
2016). In any case, material modification of a negotiable instrument is tangible evidence that will
prevent Helen from getting paid $2,000. From a legal perspective Galvin who was behind the
alteration is liable to Helen for the $2,000 [UCC 3-407 (b)] because Galvin is devoid of any
material defense. However, Helen who took the check in good faith and who was not informed
of the alteration may put into effect rights with regards to the instrument based on its initial terms
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or its terms as completed based on the statute as stipulated in [section 3-407 (c) )(1)], (Perry,
2016).
Jackie visited her grandfather, Ken, in the hospital. Ken loved his only granddaughter and
wrote her a check to help pay her tuition at college. Ken signed and dated the check but
entered 5000 college next to for in the lower left corner. Jackie completed the check for
$5,000 and deposited the check in her bank account. Before the check cleared Ken’s bank,
he died. Is Jackie still entitled to collect on the check? Support your answer with the
applicable law.
Yes: Since the check was appended with Ken’s signature, legally Jackie has the authority
to enforce the instrument to obtain payment. Again, it also shows that there are no forged or
missing endorsements (Twomey, Jennings & Greene, 2016). Moreover, Ken’s death does not in
any way impact the bank’s position to honor a check drawn on the client’s account until the bank
realizes Ken’s death and has considerable amount of time to act based on the information. Since
the bank is not aware of Ken’s death, it is under obligation to make payment to Jackie upon
presenting the check [UCC Section 4-405]. Nonetheless, even if the bank discovers about ken’s
death, it may still go ahead and pay Jackie provided a legitimate order to halt any payment does
not exist.
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References
Perry, C. (2016). Good faith in english and US contract law: Divergent theories, practical
similarities. Business Law International, 17(1), 27-39,1-2.
Twomey, D., Jennings, M., & Greene, S. (2016). Anderson’s Business Law and the Legal
Environment, Comprehensive Volume. Nelson Education.
