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

Since Jacob gave Erin a cheque payable to her, it suggests that Erin had the right to negotiate the instrument to Arthur. However, since the cheque was dishonoured, Arthur may be able to sue both Jacob and Erin for breach of contract. The fact that Jacob's account balance was only $8000 means that he did not have sufficient funds to cover the widget he bought from Erin, which can expose him to legal liability. Additionally, if the widget was defective, it may also give rise to a cause of action against Erin, who sold it to Jacob. Therefore, option E is the best choice.

Jacob Bought a Widget from Erin for $15 000