On April 5, Tim Gave Winnie a Cheque for $3000

question 48

Multiple Choice

On April 5, Tim gave Winnie a cheque for $3000 drawn on his bank account to pay for a horse. The cheque was postdated to April 15. On April 7, the horse died, and Tim stopped payment on the cheque. On April 12, Winnie took Tim's cheque to Big Bank and endorsed it. Big Bank gave her cash in the face amount of the cheque. When Big Bank sent the cheque for clearing, Tim's bank refused to honour the cheque because of the stop payment Tim placed on it, and returned the cheque to Big Bank. Which of the following statements is true?

• A) One cannot stop payment on a cheque.
• B) Tim is liable to Big Bank because Big Bank is a holder in due course of a negotiable instrument.
• C) Only Winnie is liable to Big Bank.
• D) Tim is not liable to Big Bank because he put a stop payment on the cheque before Winnie endorsed it over to Big Bank.
• E) A postdated cheque is not a negotiable instrument.

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Definitions:

Originally Scheduled Payment

The payment amount set according to the initial agreement or schedule before any adjustments.

Late Payment

A charge imposed for failing to pay a bill, invoice, or another financial obligation on time.

Rate of Return

The profit or deficit experienced on an investment within a specific duration, shown as a percentage of the investment's initial value.

Successive Years

Consecutive years; years following one after another in a sequential order.