Jane received a check as payment for her performance at a night club.In turn,she gives the check to Paul as a gift,but the check turns out to be worthless when he tries to cash it 45 days later.Does Paul have a claim against Jane?
A)Yes, because he is the holder of the instrument.
B)No, because warranties apply only if the instrument has been transferred for consideration.
C)No, because he did not make a warranty claim within 30 days.
D)Yes, because Jane should have made sure the check was valid before she gave it to Paul.

Question

Quizplus · Accepted Answer

Warranties on negotiable instruments only apply if the instrument has been transferred for consideration. Since Jane gave the check as a gift without receiving any consideration in return, there are no warranties attached to it. Hence, Paul does not have a claim against Jane.

Jane Received a Check as Payment for Her Performance at a Night