Lamar Carler Writes a Cheque for $10,000 to Leonard Wilkens

Lamar Carler writes a cheque for $10,000 to Leonard Wilkens for renovation work. Lamar endorses the reverse side of the cheque "not negotiable." Leonard endorses the cheque to the bank as payment for his loan. The renovation work is defective and costs $5,000 to repair. The bank had no notice of the defective work. Lamar refuses to pay the bank on the cheque. Which of the following is TRUE?

A) The bank was a holder in due course and can seek payment in full from Lamar.
B) The bank was not entitled to cash the cheque because there was a restriction on its negotiability
C) The bank was a holder in due course without notice
D) Lamar and Leonard are jointly liable as both signed on the cheque
E) Lamar cannot set off the costs of repair against the bank