Shankar purchased a new car from Friendly Fred's Autos. Fred indorsed the check to Maya for value. Maya presented the check to the bank, and the bank cashed the check. Later, Shankar attempted to place a stop-payment order on the check, because the car he purchased from Fred was defective. Under these circumstances, _____.

Question

Quizplus · Accepted Answer

In the given scenario, Shankar has no remedy against Maya and the bank. Maya qualifies as a holder in due course. If the bank paid the check to Maya over the stop-payment order, Shankar would not be able to have his account recredited because Shankar would not be able to show that he sustained any loss.

Shankar Purchased a New Car from Friendly Fred's Autos