Shawn purchases a computer from Adelaide Electronics,and writes them a check of $1,000.However,after Shawn brought the computer home,it abruptly stopped working due to a virus attack.Shawn calls his bank ordering a stop-payment on the check.Adelaide Electronics gave the check to Jack Enterprises,their creditor.Shawn's bank honored the check when Jack presented it.Which of the following is true in this case?

Question

Quizplus · Accepted Answer

To show a loss,the drawer must establish that the drawee bank paid a person against whom the drawer had a valid defense to payment.However,if the check is presented by Jack,Shawn cannot establish that he has suffered a loss.The only recourse for Shawn would be to pursue Adelaide Electronics on his misrepresentation claim.

Shawn Purchases a Computer from Adelaide Electronics,and Writes Them a Check