Question

Suppose Fred has a payroll check from his place of employment, Kelsey's Pub. He then endorses the back of a check and gives it to Clara as a form of payment. The holder (Clara) presented Fred's check, and the bank dishonored the check because of insufficient funds in Kelsey's Pub account. Who is not liable for the check

Answer 1

Answer:

Clara is not liable.

Explanation:

When a check is drawn on an account that is not funded it will be rejected at the bank. This is referred to as a bounced check or dud check.

When did checks are issued the customer that issued them may be barred from performing clearing transactions, blacklisted with credit bureaus, or bar serial issuers from accessing loans.

In this case Clara is not liable because she did not either issue the check or own the account in question.

However Fred and Kesley's pub are partially liable. Fred issued the check and Kesley's Pub owned the account that was unfunded.