Florida Broker Practice Exam

What type of negligence could cause a broker to be liable for a check not being honored?

1. Minor negligence

2. Culpable negligence

3. Unintentional negligence

4. Negligence by a third party

The correct answer is: Culpable negligence

Culpable negligence refers to behavior that demonstrates a failure to exercise the expected standard of care, leading to potential harm or loss. In the context of a broker being liable for a check not being honored, this type of negligence implies that the broker failed to take reasonable actions that a prudent broker would normally take to prevent such an event. For instance, if a broker accepted a check from a client without verifying sufficient funds or without conducting proper due diligence on the client’s financial background, this could be viewed as culpable negligence. The broker's actions not only showed a lack of appropriate caution but also directly contributed to the check not being honored, resulting in financial repercussions. This concept underscores the importance of brokers adhering to established ethical and professional standards to protect themselves and their clients from potential losses. Ultimately, the liability arises from the broker's conscious disregard for the consequences of their actions, justifying the designation of culpable negligence in this scenario.