Question

Farnsworth has an instrument which was made "payable to bearer." She loses the instrument, but it is found by Mellon. What can Mellon do?

1) Collect payment on the instrument
2) Not collect payment because he gave no value for it
3) Not collect payment on the instrument because he only found it
4) None of these

Answer 1

Mellon, having found a lost bearer instrument, can legally collect payment on it because bearer instruments entitle any holder to payment.

Step-by-step explanation:

If Farnsworth has an instrument which was made "payable to bearer," and she loses it, the instrument can be collected by anyone who possesses it because it does not require endorsement. When Mellon finds the lost bearer instrument, he can legally collect payment on it.

This is because bearer instruments are designed to allow any holder of the instrument to be presumed the rightful owner and thus entitled to payment. However, there may be laws and regulations that may require finders of lost property to make an effort to return it to its rightful owner.

The correct response to what Mellon can do is: 1) Collect payment on the instrument.