Book Opener

Safe DrivingAutomobile crashes arethe leading cause ofdeath for Americansaged 15–20. In 2001,according to theNational HighwayTraffic SafetyAdministration, 8,13715- to 20-year-olddrivers were involvedin fatal crashes, 3,608were killed, and337,000 were injured.Drunk driving, drugs,speeding, andinexperience arecommon causes ofauto accidentsinvolving teens. Howcan states reducethe number of teenswho are in vehicleaccidents?Get InvolvedStart a safe drivingcampaign in yourschool or community.When you’re driving,be alert and responsible.When you’re apassenger, be firmwith your friendsabout your safety.A bank that has taken an instrument from a customer to send throughthe bank collection process may supply any indorsement of the customerthat is necessary to title. This rule is designed to speed up bank collectionsby eliminating the need to return to a depositor any items that werenot indorsed. A bank, however, may not supply an indorsement if theinstrument contains the phrase “payee’s indorsement required.”Forged IndorsementsA forged indorsement is not valid, and anyone who takes a forgedinstrument does not acquire title and is not a holder. Order paper requiresthe indorsement of the person to whose order the instrument is madepayable. The indorsement may be made by that person or by someoneelse on that person’s behalf (an authorized agent), but not by someoneacting without authority. Anyone who pays an instrument on which thereis a forged indorsement is liable to the true owner for the amount of theinstrument.Warranties of IndorsersTo encourage people to accept negotiable instruments from others,a system of implied warranties is part of the law of negotiable instruments.An indorser who receives consideration for an instrument makesfive warranties to subsequent transferees of the instruments:1. Indorsers who receive consideration warrant that they have good titleto the instrument.Example 8. Josephine Enquist gave Wireless, Inc. a check inpayment of her cell phone bill. The check contained a blankindorsement by Hannah O’Leary. Later, Wireless, Inc. learnedthat Josephine had found the check on the street and that the realowner, Hannah O’Leary, had issued a stop-payment order.Josephine, by her indorsement, had warranted that she was thetrue owner of the instrument. She would be held liable on thiswarranty for any loss suffered by Wireless, Inc. She also couldbe vulnerable to criminal prosecution.2. Indorsers who receive consideration warrant that all signatures aregenuine or authorized. If a signature is forged, then the indorser maybe held responsible to a subsequent holder for payment of theinstrument.3. Indorsers who receive consideration warrant that the instrument hasnot been altered.4. Indorsers who receive consideration warrant that no defense of anyparty is good against the indorser. If the instrument is dishonored fora valid, legal reason, then the holder can still recover against theindorser.550 Unit 5: Using Your Purchasing Power