About Business Law

Due to a number of factors, the check from Glen to Carol is a bearer instrument. First of all, the cheque has no instructions regarding who should receive the funds. Second, the money is payable in cash, according to the negotiable instrument (Bartel v. Bank of America Corporation 2015). Payments to bearer instruments are more likely to make payments easier, but they are also more prone to be abused because losing the physical documentation of an instrument is enough to lose all of its value. Did Glenn’s delivery of the check to Carol constitute a valid negotiation? Why or why not?

The check constitutes of a valid negotiation because Carol had no idea that Glen stole the check from Maggie. Primarily, she accepted the check from Glen in good faith and therefore deposited the cash to her account (Garden Check Cashing v. First Nat. Bank 1966). Importantly, this process completes the negations as Glenn us mainly discharged from the debt as Carol received money due to her. On the side of Carol, Glenn would be mainly treated as a holder in due course.

Question 3: What type of instrument did Carol make after endorsing the check?

The instrument that Carol made was restrictive endorsement as it is clearly mentioned for deposit and also on the back of the check she mentions her name. This ensured that the money was to be deposited to her account.

Question 4: Is Carol or Glenn a bona fide purchaser in this case? What legal significance does this would have?

From the case, Carol is considered a bona fide purchaser as she accepted the check without any information or knowledge that it was stolen. If Maggie decides to start any legal action, she can only do that against Glenn as he is the person responsible for taking the check.

Question 5: If Maggie sues Carol and Glenn, does Maggie have the right to recover the $1,000.00 from Carol and/or from Glenn? Explain all theories on which Maggie could recover from Carol and/or Glenn as well as Carol and/or Glenn’s potential defenses against Maggie.

Maggie can only retrieve the money from Glenn as he is the person responsible for stealing the check and handing it to Carol who accepted it in good faith. Maggie can only recover the money from Carol only if she can prove that Carol had prior knowledge that the check was stolen (Fulton Nat. Bank v. Delco Corp 1973). Consequently, Maggie can claim that Carol was the person who took the check and not Glenn. On the other hand, Carol on her defense can argue that she could have withdrawn the cash and not deposited the amount to her account.











References:

Bartel v. Bank of America Corporation, DC: Court of Appeals 2015

Fulton Nat. Bank v. Delco Corp., 195 SE 2d 455 - Ga: Court of Appeals 1973

Garden Check Cashing v. First Nat. Bank, 25 AD 2d 137 - NY: Appellate Div., 1st Dept. 1966.