Asked by ishmael koroma on Oct 01, 2024
Edith purchases what is represented to be a new DVD player from Big Al's Electronic Emporium,by giving Al a check for $200 drawn on Big Bank.Edith then discovers that the DVD player is a used model and calls Big Bank to place a stop-payment order on the check.Big Al negotiates the check to John who qualifies as a holder in due course.John presents the check to Big Bank the next day,and Big Bank pays the check.Which of the following statements is most accurate?
A) For recourse,Edith would have to pursue Big Al on her misrepresentation claim.
B) Edith may use her personal defense of misrepresentation to have her account recredited by Big Bank.
C) Edith may pursue both Big Bank and John for the amount taken from her account.
D) If Big Bank had refused to pay the check,John would have had no recourse against Edith.
Misrepresentation Claim
A legal assertion that one party has made false statements that another party relied on to their detriment.
Stop-Payment Order
A request made to a financial institution to cancel payment on a check or payment request before it has been processed.
DVD Player
An electronic device that plays DVDs, typically allowing for the viewing of movies and other video content on a TV or monitor.
- Acquire knowledge about the roles and responsibilities of financial institutions in situations involving insufficient funds checks, future-dated checks, and stop-payment directives.
- Comprehend the interrelations among the drawer, drawee, and payee within check transactions.
- Comprehend the rights and liabilities of parties in transactions involving goodwill, misrepresentation, and unauthorized alterations.
Learning Objectives
- Acquire knowledge about the roles and responsibilities of financial institutions in situations involving insufficient funds checks, future-dated checks, and stop-payment directives.
- Comprehend the interrelations among the drawer, drawee, and payee within check transactions.
- Comprehend the rights and liabilities of parties in transactions involving goodwill, misrepresentation, and unauthorized alterations.