In this case ONB properly refused the rights of the cheque as Betty did not indorse the cheque. In the case of two parties to the cheque both have to indorse it. Yes the bank did the right thing in debiting Dan’s account as the cheque has not been cashed at ONB. Dan has the right to sue Bill as the cheque has been dishonored. However, one thing may hold against Dan as it was his duty to properly check the instrument before forwarding it to the bank. Dan does not hold any right against Betty as he does not hold any connection with the negotiation.
The note contains the statement, “This note is subject to the contract I signed with the payee, Paula Prince, on May 1, 2010. ”: This is not allowed as in the case of the negotiable instruments, any thing underlying another contract will not be valid. The note contains the statement, “This note is in payment for a Sony television which I have purchased from the maker. ”: The name of the receiver of the payment has to be mentioned in the negotiable instrument to make it valid. The note contains the statement, “This note is payable from the proceeds of my 2011 cotton crop.