Question

Sally landed a job in the accounting department of Thyme Life Biscuit Company.   On her fourth day on the job, Joe, her boss had to leave work unexpectedly. Joe usually prepared the bank deposit at the end of each business day, but on this day, Sally needed to prepare the bank deposit.

There were 54 checks to be deposited. Sally used the stamp provided by her employer and indorsed 52 checks with the stamp "Thyme Life Biscuit Company." Some of the checks stuck together and two of those checks were not indorsed. The bank received the deposit and noticed the lack of indorsement on the two checks. What are the effects of the lack of indorsement on the two deposited checks?

In addition, one of the checks that Sally had stamped and was to be included with the deposit was lost in the bank parking lot. Paul found that lost check and deposited it into his personal account. What are the effects of Thyme Life Biscuit Company’s indorsement on the lost checks?  

Answer 1

Lack of endorsement makes the cheques bearer cheques which means that the holder of the cheque can deposit it in his account. If the bank received cheques which were not endorsed, it can still accept them and provide an endorsement for the customer.

Paul cannot deposit the endorsed cheque since it does not act as a bearer instrument. It cannot be deposited in the account of the holder since it is endorsed.