Sasha drew a check payable to the order of Janice on First Bank. Janice indorsed the check and sold it to Karl, who took the check to First Bank and requested that the bank certify the check. The bank did so. Later, Karl presented the check for payment, but First Bank refused to pay. In this scenario, which of the following parties may Karl sue for not receiving payment?

Question

Quizplus · Accepted Answer

In the given scenario, Karl can sue First Bank. Normally, a drawee bank is not obligated to certify a check. When a drawee bank does certify a check, it substitutes its undertaking (promise) to pay the check for the drawer's undertaking and becomes obligated to pay the check. It also adds its signature to the check to show that it has accepted primary liability for paying it.

Sasha Drew a Check Payable to the Order of Janice