Question

Hudson contracted with Ripley to install solar panels on her boat. The installation went well, seemingly. Unfortunately, two days after the installation the panels stopped working. Ripley claimed that the problem was Hudson's fault, and demanded that he make the system work; Hudson denied responsibility. Ripley had paid Hudson by properly executed check, and Hudson still had not deposited the check at the time of Ripley's demand. The day after receiving the demand, Hudson negotiated the check to Bishop (the check appeared regular, was unaltered and there was no question as to any default being involved). In exchange for the check, Bishop provided Hudson with a large rechargeable battery that could, in future, be used in solar powered systems. Hudson suspected that Ripley's claim was valid and was glad to have negotiated the check before Ripley dishonored it. Bishop sought payment from Ripley for the check. Ripley refused to pay. Bishop sues. In what circumstance will Ripley win?

Answer 1

Answer: The answer is provided below

Step-by-step explanation:

Hudson had negotiated the check to Bishop with the full knowledge on the existing claim by Ripley that the solar panels installed by him were not been in working condition could be due to a fault at his end and he had not discharged his part of the contractual obligation for being entitled to the payment.

Based on the National Check Fraud Center, the payee can only sue the drawee who is Ripley if the underlying obligation for which the check is given is extinguished. Since Hudson had failed to discharge his part of his obligation for receiving the check from Ripley, Bishop cannot sue Ripley for dishonoring the check.