IMPOSTOR RULE
Under UNIFORM COMMERCIAL CODE, Article 3, Sect. 404(a), a rule stating that if an impostor endorses a negotiable instrument and receives payment in GOOD FAITH, the drawer of the instrument is responsible for the loss. An example would be if an individual impersonates a person
for whom a check has been cut or misrepresents
himself as that person’s agent. If the impostor
receives the check, endorses it, and cashes it at the
drawer’s bank, the drawer is responsible for the
loss, because the bank accepted the endorsement in
good faith. The bank may be responsible for a per-
centage of the loss if it failed to exercise “ordinary
care”; for example, if the bank did not check the
impostor’s identification. The imposter rule is
based on the assumption that between the bank
and the drawer, the drawer is in a better position
