Marissa gives Larry a check made payable to cash in payment for a

computer that she is buying from him. Larry then gives the check to his

nephew, Gary Graduate, without indorsing it, as a graduation gift. Marissa

then stops payment on the check because she claims that Larry breached the

contract. When the check bounces, Gary makes a claim against Marissa for

the amount of the check. Marissa responds that Gary cannot collect on the

check since he is not a holder because Larry never indorsed the check to

him. Which statement is true?

1. Gary is at least a holder

2. Gary is not a holder or holder in due course because the check was never indorsed

3. Gary is not a holder or holder in due course because of the shelter principal

4. Gary is not a holder or holder in due clause because Larry breached the contract

Question

Business

Sammy Wise

26 December, 01:48

Marissa gives Larry a check made payable to cash in payment for a

computer that she is buying from him. Larry then gives the check to his

nephew, Gary Graduate, without indorsing it, as a graduation gift. Marissa

then stops payment on the check because she claims that Larry breached the

contract. When the check bounces, Gary makes a claim against Marissa for

the amount of the check. Marissa responds that Gary cannot collect on the

check since he is not a holder because Larry never indorsed the check to

him. Which statement is true?

1. Gary is at least a holder

2. Gary is not a holder or holder in due course because the check was never indorsed

3. Gary is not a holder or holder in due course because of the shelter principal

4. Gary is not a holder or holder in due clause because Larry breached the contract

+1

Answers (1)

Know the Answer?

Harper Vance · Answer 1

The correct answer is the option 2: Gary is not a holder or holder in due course becuase the check was never indorsed.

Explanation:

To begin with, the field of law and more in particular the commercial law and all its scenarios, any check that has been passing through hands must be indorsed in order to be able to be payable to the person who has it the last, in any other case if the check is not indorsed then that means by law that the check has never changed its owner and therefore that it can not be payable for anybody else. That is why, Gary is not a holder because his uncle did not indorsed him the check correctly.