Module: General Practice
Q82: Under Section 85(1), a Paying Banker is discharged from liability if he pays an "Order Cheque" in due course, even if:
✅ Correct Answer: B
Section 85(1) provides a crucial shield to the Paying Banker regarding Endorsements.
Drawer's Signature: The banker is expected to know their own customer's signature.
If they pay on a forged drawer's signature, they are liable (no protection). Payee's Endorsement: The banker cannot possibly know the signatures of all payees and endorsees in the world.
Therefore, the law protects the banker if they pay in good faith on an endorsement that looks regular, even if it turns out to be forged.
This is an exception to the general rule that "Forgery conveys no title."
Drawer's Signature: The banker is expected to know their own customer's signature.
If they pay on a forged drawer's signature, they are liable (no protection). Payee's Endorsement: The banker cannot possibly know the signatures of all payees and endorsees in the world.
Therefore, the law protects the banker if they pay in good faith on an endorsement that looks regular, even if it turns out to be forged.
This is an exception to the general rule that "Forgery conveys no title."