Question

McGraw purchased an antique rocking chair from Tillis by check. The check was dishonored by the bank due to insufficient funds. In the meantime, McGraw sold the rocking chair to Rio who had no knowledge that McGraw’s check had been dishonored. Which of the following is correct?A. Tillis may repossess the rocking chair from Rio.B. Tillis may recover money damages from Rio.C. Tillis may recover money damages from McGraw.D. Tillis may recover damages from McGraw based on fraud.

Answer 1

Answer:

Option C is the correct option.

Explanation:

As the rights and obligation of the antique rocking chair are been passed to third party, so the damage caused by the checque been bounced is the monetry consideration agreed between the party to the contract, McGraw and Tellis. So Tellis may recover money damages from McGraw. However there is a special condition that can allow Tellis recover his asset from Rio if the third party knew before purchase of this asset, that the checque paid to Tellis by McGraw was dishonoured but still he contracted with McGraw to acquire the antique rocking chair.

Overall the option C is the correct option with which the case scenario relates.