How has Beta transferred the check? What rights, if any, does Gamma have against Beta?

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How has Beta transferred the check? What rights, if any, does Gamma have against Beta?

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Alpha issues a negotiable check to Beta payable to the order of Beta in payment of an obligation Alpha owed Beta. Beta delivers the check to Gamma without indorsing it in exchange for one hundred shares of General Motors stock owned by Gamma. How has Beta transferred the check? What rights, if any, does Gamma have against Beta?

Explanation & AnswerSolution by a verified expert

Explanation

Individual A endorsed the instrument to Individual B, making Individual B the owner of the instrument. Even though Individual B did not endorse the check to Individual G, the instrument was still valid as the instrument was transferred to Individual G through assignment.
 
Individual G has special rights to invalidate the transfer of the check because an exchange value is required to be paid to Individual B, which is not permissible in the case of a negotiable financial instrument.

Verified Answer

Individual B had transferred the check to Individual G through a general assignment without certification.
 
Individual G has theright to disqualify the endorsement because the transfer of check by Individual B is done in place of the value of 100 shares of the company.

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