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Michael issues a check for $10,000, dated July 1, payable to Shirley. The check is drawn...

Michael issues a check for $10,000, dated July 1, payable to Shirley. The check is drawn on NoHo Savings Bank (NSB). Shirley indorses the check and transfers it to Jack. What will trigger the liability of Michael and Shirley on the check?

This is an essay question at least 7 sentences long.

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Answer #1

The primarily liable parties are makers of notes (Michael) and drawees of drafts (NSB), and their liability is unconditional. The secondary parties are drawers and indorsers (Shirley). A check is said to be dishonoured when the payment is not made on its presentation to the bank. So, if Jack decides to present the check to bank and if it gets dishonoured, Jack would held Shirley liable. And in return, Shirley would turn to Michael.

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