What is forgery in negotiable instrument?

– When a signature is forged or made without the authority of the person whose signature it purports to be, it is wholly inoperative, and no right to retain the instrument, or to give a discharge therefor, or to enforce payment thereof against any party thereto, can be acquired through or under such signature, unless …

Is a forged check a negotiable instrument?

A forged negotiable instrument is not enforceable against the party whose name was forged. The forged instrument is, however, enforceable against the forger. For example, a drawee bank on a forged check must use ordinary care in inspecting a potentially forged signature when paying check.

What is the exception to the general rule that a forged endorsement is no endorsement in law?

The only exception to this is where the payee’s indorsement on a cheque payable to order is forged. In such a case it ia provided by Section 85 of the Negotiable Instruments Act, 1881, that the drawee is discharged if he pays the amount in due course.

Would it make any difference if the drawer’s signature were forged?

The drawer bank that pays a forged check is generally held responsible for the resulting loss. The forgery of a person’s signature usually imposes no accountability against the forgery sufferer, but the forger is responsible as a signer of the instrument, even where he signs in a name other than his own.

What is the effect of forgery in a negotiable instrument?

What is the effect when there is forgery of a signature in a negotiable instrument? It does NOT render the instrument void. The signature is wholly inoperative, and no right to retain the instrument, or to give a discharge thereof, or to enforce payment thereof against any party to it, is acquired through or under such signature. (Cut‐off rule) 1.

Who is liable in the case of a forged instrument?

Payment under a forged instrument isn’t to the drawer’s order. In case of a forged instrument or one that’s payable to order, the person whose signature is forged isn’t liable; the same is true for prior parties. 3.) Even if the signature is forged, there are parties who can’t set up forgery or lack of authority as a defense. These are: a.)

What does the law of negotiable instruments mean?

It includes the quality of transferability i.e. transfer of property (ownership) from one person to another based on documents which represents a contractual obligation for payment of money.

What are the defenses for forgery of a signature?

DEFENSES CUT OFF BY ADMISSION OF GENUINENESS, ETC. 1. The defense that the signature is a forgery 2. That it was unauthorized, as in the case of an agent signing for his principal, or one signing on behalf of a partnership or corporation or that in case of the latter, that the corporation was not authorized under its charter to sign the instrument