II. Hari Holda received a check from his sister in return for a used stereo. She
ID: 2425156 • Letter: I
Question
II. Hari Holda received a check from his sister in return for a used stereo. She had received it from Steve Stevens a few days before she gave it to her brother. It was given to her in return for a promise to paint Stevens’ house. The check was drawn by Darwin, Inc. on First Bank in the amount of $1,500.00 and was originally payable to Penny Paul for salary due her. It had the following endorsements on the back.
1. s/Penny Paul
2. Without Recourse
s/Ed Esquire
3. Pay to Nanci Holda
s/Steve Stevens
4. Pay to Hari Holda
When Nanci gave the check to Hari she forgot to sign her name. Before Hari could get his sister’s signature he learned that Penny Paul had been fired from her job for submitting a fraudulent time sheet. Hari then located his sister and got her to sign the back of the check. He then endorsed the check and deposited it in his account at Second Street Bank only to have it returned to him two days later since it was dishonored by First Bank pursuant to Darwin’s stop payment order.
(15) 2. Discuss in detail what, if any, recourse Hari has against ALL the other
Parties. Provide specific legal reasons for your conclusions.
(5) 3. What should Hari do to protect his legal rights when he receives the check from Second Street Bank?
Explanation / Answer
as the instrumnet was given to hari under a legal endorsemnet Hari was the legal recepient of the amount but when the instrument got bounced then the final endorsee has recourse against all the previous endorsers for dishonouring the instrumnet.
Hari at first can legaly ask his sister make good his loss and if Nancy refuses to do then hari has the option whether to go to the court and sue Nancy for the payment or he may also go to all the previous endorsers for the paymnet including the compnay for honoring the cheque .
As per law a person who has accepted a legally endorsed negotiable instrument in a good faith should not suffer the loss if he did not have the knowledge regarding the firing of Penny Paul. so, as Hari acted in honest manner without having any prior knowledge of Pennys firing he has right to get the cheque honoured by any of the previous endorsers.