I. NOT ALTERNATIVELY: PAYABLE TO “X AND Y”
If a check is payable to two or more persons not alternatively (e.g., “X and Y”), it is payable to all of them and may be negotiated, discharged, or enforced only by all of them (See, U.C.C. § 3-110(d)). If a check is made payable to “X and Y,” it should be paid only if it is indorsed by both X and Y.
II. ALTERNATIVELY: PAYABLE TO “X OR Y”
If a check is payable to two or more persons alternatively (e.g., “X or Y”), it is payable to any of them and may be negotiated, discharged, or enforced by any or all of them in possession of the check (See, U.C.C. § 3-110(d)). If a check is made payable to “X or Y,” it can be paid if it is indorsed by either X or Y.
III. AMBIGUOUSLY: PAYABLE TO “X/Y” OR “X,Y” OR “X AND/OR Y”
If a check payable to two or more persons is ambiguous (e.g., “X/Y” or “X,Y” or “X and/or Y”), as to whether it is payable to the persons alternatively, the check is payable to the persons alternatively (See, U.C.C. § 3-110(d)). The Official Commentary to U.C.C. § 3-110, Comment 4, states that where it is not clear whether a check is payable to multiple payees alternatively:
In the case of ambiguity, persons dealing with the instrument should be able to rely on the indorsement of a single payee. For example, an instrument payable to “X and/or Y” is treated like an instrument payable to X or Y.
Banks should be safe in paying ambiguous joint payee checks with the indorsement of only one of the payees.