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Tara Created a Cheque for $5000 That Was Payable to Bearer

Question 2

Multiple Choice

Tara created a cheque for $5000 that was payable to bearer. She delivered it to Simon. Simon negotiated it to Melanie, who then negotiated it to Oscar, who then negotiated it to Mike. While Melanie had possession of the cheque, she altered it so that it now appears to be a cheque for $25

A) Mike is entitled to receive $50 000 from Tara as long as Melanie acted in good faith.
B) If the alteration is apparent to the naked eye, the drawee bank would be entitled to debit $25 000 from Tara if she carelessly facilitated the alteration when she drafted the cheque.
C) If the alteration is not apparent to the naked eye, Mike is entitled to receive $5000 from Tara if she did not carelessly facilitate the alteration when she drafted the cheque.
D) If the alteration is apparent to the naked eye, Mike is entitled to receive any payment from Tara.
E) If the alteration is not apparent to the naked eye, Mike is entitled to receive $50 000 from Oscar.

Correct Answer: