Sarah draws a check on her account at Bank of America, payable to Trees R US....

Sarah draws a check on her account at Bank of America, payable to Trees R US.

a. She postdates the check by 15 days. Does this affect the negotiability? Explain.

b . Identify the drawer, the drawee and payee.

Solutions

Expert Solution

(a) Postdating a check does not affect the negotiability of the check, it simply means the payee cannot cash the check before the date mentioned on the check. So, if Sarah postdates the check by 15 days, it means that Trees R US can cash in the check after 15 days from the day she is writing the check. Once a person signs a check, it becomes a legal tender (i.e. it is accepted as a legal form of payment), hence it does not affect the negotiability of the check.

(b) Drawer = Sarah, Drawee = Bank of America, Payee = Trees R US

The person who is writing the check is called as Drawer, in this case, Sarah is the Drawer since she is writing the check. The bank from where the check is drawn is called as Drawee, in this case, Bank of America is the Drawee since Sarah draws a check from her Bank of America account. The payee is the person to whom the check is payable and here Trees R US is the organization who would receive the money from Sarah so Trees R US is the payee.

Rahul Sunny answered 1 year ago

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