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If Ben presents the check for payment and it is dishonored, is Mary liable for payment of the $50? Explain.

John has a checking account at Auburn Bank. He writes a check to Anders Bookstore for his textbooks. In this situation:

Heather borrowed $5,000 from James and signed a promissory note payble to James on December 31, 2020, with interest at a rate of 5% per annum.  James negotiated the note to Linda, as payment for an oil painting that Linda sold to James.  Before the note is due, Heather filed bankruptcy and her obligations to pay according to the terms of the note were discharged.  Does Linda have a cause of action against Heather and/or James? Explain.

Increasing the dollar amount of an instrument is considered a material alteration, which is a real defense to enforcement of a negotiable instrument.

If Mrs. Waldrop has funds in her account to cover the check, what is the obligation of Compass Bank upon presentment of the check for payment?  

The primary benefit of a negotiable instrument is that it can be used as a substitute for money.

The drawee of a check is the financial institution where the drawer has an account.

Wayne issues a note payable to Molly. Molly indorses the note in blank on the back and gives it to Jerry. Which of the following statements correctly describes the status of this instrument?

The endorsement on the back of the check:

The following information pertains to questions 41-43. Mary agreed to buy Ben’s textbook for $50, but she doesn’t have any cash and she needs the money in her checking account to pay her bills. So, Mary signs her name on the back of a check in the amount of $50 that she received as a gift from her grandmother and gives it to Ben in exchange for the textbook.