§12A-3-405. Employer's Responsibility for Fraudulent Indorsement by
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/ok/title-12a-uniform-commercial-code/12a-3-405·A research copy — for the controlling text, always check the official state or federal source. Not legal advice.
Employee.
EMPLOYER'S RESPONSIBILITY FOR FRAUDULENT
INDORSEMENT BY EMPLOYEE
(a)In this section:
(1)"Employee" includes an independent contractor and
employee of an independent contractor retained by the
employer;
(2)"Fraudulent indorsement" means
(i)in the case of an
instrument payable to the employer, a forged
indorsement purporting to be that of the employer, or
(ii)in the case of an instrument with respect to
which the employer is the issuer, a forged indorsement
purporting to be that of the person identified as
payee; and
"Responsibility" with respect to instruments means
authority
(i)to sign or indorse instruments on behalf
of the employer,
(ii)to process instruments received
by the employer for bookkeeping purposes, for deposit
to an account, or for other disposition,
(iii)to
prepare or process instruments for issue in the name
of the employer,
(iv)to supply information
determining the names or addresses of payees of
instruments to be issued in the name of the employer,
(v)to control the disposition of instruments to be
issued in the name of the employer, or
(vi)to act
otherwise with respect to instruments in a responsible
capacity. "Responsibility" does not include authority
that merely allows an employee to have access to
instruments or blank or incomplete instrument forms
that are being stored or transported or are part of
incoming or outgoing mail, or similar access.
(b)For the purpose of determining the rights and liabilities of a person who, in good faith, pays an instrument or takes it for value or for collection, if an employer entrusted an employee with responsibility with respect to the instrument and the employee or a person acting in concert with the employee makes a fraudulent indorsement of the instrument, the indorsement is effective as the indorsement of the person to whom the instrument is payable if it is made in the name of that person. If the person paying the instrument or taking it for value or for collection fails to exercise ordinary care in paying or taking the instrument and that failure substantially contributes to loss resulting from the fraud, the person bearing the loss may recover from the person failing to exercise ordinary care to the extent the failure to exercise ordinary care contributed to the loss.
(c)Under subsection
(b)of this section, an indorsement is made in the name of the person to whom an instrument is payable if
(i)it is made in a name substantially similar to the name of that person or
(ii)the instrument, whether or not indorsed, is deposited in a depositary bank to an account in a name substantially similar to the name of that person. Laws 1961, p. 111, § 3-405; Laws 1991, c. 117, § 68, eff. Jan. 1, 1992.