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Can you summarize IACO 554.3404?
UNIFORM COMMERCIAL CODE > Impostors fictitious payees.
Short Summary
This section of the Iowa Code, specifically under the Uniform Commercial Code, addresses the issue of impostors and fictitious payees in relation to instruments. It states that if an impostor induces the issuer of an instrument to issue it to the impostor or a person acting with the impostor by impersonating the payee or an authorized person, an endorsement of the instrument by any person in the name of the payee is effective as the endorsement of the payee in favor of a person who pays the instrument or takes it in good faith. Additionally, if the person who determines to whom the instrument is payable does not intend the identified payee to have any interest or if the payee is fictitious, certain rules apply until the instrument is negotiated by special endorsement. These rules include considering any person in possession of the instrument as its holder and an endorsement in the name of the payee stated in the instrument as effective in favor of a person who pays or takes the instrument in good faith. The section also clarifies that an endorsement is considered in the name of the payee if it is made in a name substantially similar to that of the payee or if the instrument is deposited in a depositary bank to an account with a name substantially similar to that of the payee. Furthermore, if a person paying or taking the instrument fails to exercise ordinary care and this failure contributes to a loss resulting from payment of the instrument, the person bearing the loss may recover from the person failing to exercise ordinary care to the extent that the failure contributed to the loss.
Whom does it apply to?
Issuers of instruments, persons acting in concert with impostors, persons in possession of the instrument, persons paying the instrument or taking it for value or for collection
What does it govern?
Impostors and fictitious payees
What are exemptions?
No exemptions are mentioned.
What are the Penalties?
No specific penalties are mentioned.
Jurisdiction
Iowa