More details to this question:
I was an endorser on a check. A subsequent holder presented the check to the bank named on the instrument and was informed that there was not enough money in the account to honor the check. The next day, the subsequent holder demanded the money from me. Do I have to pay the subsequent holder of the instrument? Why or why not?
1 ANSWER
Assuming no problem with the check itself other than insufficient funds (i.e. it isn't forged, etc.), yes. Your check constitutes a promise to pay the bearer upon presentation; if you fail to do so, you will be sued, and will lose. Even if you had a dispute with the original holder (i.e. you claim to have been induced to issue the check through fraud, you claim there were problems with the goods or services you received in exchange for the check, etc.), that is no defense to the subsequent holder if he/she is what is known as a holder in due course (someone who pays value for the instrument without notice of any defenses to it.)
Answered on Dec 16th, 2014 at 12:06 PM