Jacob bought a widget from Erin for $15 000.In payment, he gave her a cheque that was payable to her.The cheque was drawn on his account at the Bank of Kitchener.Erin signed her name on the back of the cheque and delivered it to Arthur in order to discharge a debt that she owed to him.Arthur presented the instrument to the Bank of Kitchener for payment, but was refused payment because the balance for Jacob's account was only $8000.Which of the following statements is TRUE?

Question

Quizplus · Accepted Answer

Arthur may be able to sue both Jacob and Erin for breach of contract, as the cheque was not honored due to insufficient funds in Jacob's account. Erin, as the payee of the cheque, also has a responsibility to ensure that the cheque can be honored before transferring it to someone else.

Option B is incorrect because Arthur has no right to collect money from the bank, as the cheque was not payable to him. Option C is irrelevant to the situation as it does not relate to the issue of dishonored cheques. Option D is incorrect because notice of dishonour can be made orally or in writing, depending on the circumstances. Option E is also not relevant to the situation, as the bank is already aware of the dishonoured cheque.

Jacob Bought a Widget from Erin for $15 000