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A check is drawn on Jones Bank by Tamara and made payable to the order of Chris. Chris indorses it "for deposit only, Acct. 2275, Chris" and gives it to Plainer Bank for deposit. Plainer stamps "pay any bank" on the check along with its indorsement and negotiates it to Stone Bank. Stone Bank simply stamps "Stone Bank" and negotiates it to SmallTown Bank. If SmallTown wants to negotiate it to the electric company to pay its bill, can it?

A) Yes, SmallTown Bank can negotiate it to the electric company.
B) No, SmallTown Bank cannot negotiate it to the electric company.
C) Maybe, but they need additional authorization.
D) It depends on the specific policies of the electric company.

User Senschen
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1 Answer

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Final answer:

No, SmallTown Bank cannot negotiate the check to the electric company.

Step-by-step explanation:

No, SmallTown Bank cannot negotiate it to the electric company. A check is a negotiable instrument that can be transferred from one party to another through endorsement. In this case, the check was initially drawn on Jones Bank by Tamara and made payable to Chris. Chris indorsed it 'for deposit only, Acct. 2275, Chris' and gave it to Plainer Bank for deposit. Plainer stamped 'pay any bank' on the check along with its endorsement and negotiated it to Stone Bank. Stone Bank simply stamped 'Stone Bank' and negotiated it to SmallTown Bank. However, SmallTown Bank can only negotiate the check to another bank or financial institution that will accept it. The electric company is not a bank or financial institution, so SmallTown Bank cannot negotiate the check to them.

User Mot
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