Use the Fact Situation Above to Answer the Question

question 5

Multiple Choice

Use the fact situation above to answer the question. When Albert advised the bank that the cheque was lost and put the stop payment on it,he then asked the bank to replace it with another certified cheque.The bank responded by telling Albert that it would only replace the cheque if Albert entered into an indemnity agreement with the bank indemnifying the bank in the event the cheque was found and presented for payment.In this case

• A)the bank can refuse to replace the lost certified cheque because it always has the right to refuse to honour any negotiable instrument.
• B)the bank can refuse to replace the lost certified cheque unless Albert agrees to give it the indemnity agreement.
• C)the bank cannot refuse to replace the lost certified cheque with another one because Albert is the original drawer.
• D)the bank cannot refuse to replace the lost certified cheque because the stop payment is effective to protect the bank if the original certified cheque is presented for payment.
• E)none of the above