Question

Lisa signed up to take Business Law, Introduction to Business, and Microeconomics, and paid her tuition by check. When she took the check to cashiering, the cashier would not accept the check. What is the reason for the cashier's reaction? Refer to the requirements of negotiable instruments in your explanation.

Answer 1

Any type of negotiating instrument is not the legal tender for promising any business transaction as these instruments are not the guarantee of realization of payment. The negotiating instruments are not the promise to be paid by the banks but in fact, these are the request to issue the payment provided that the account holder has sufficient balance and instrument has all the legal requirements. Thus there are high probabilities that the checks may be rejected by the banks. The business and creditors have the legal right to be paid in the prevailing legal tender and they can reject the acceptance of any other type of tender for the payment.

Thus in the given case when Lisa tried to pay the tuition by check, the cashier has the legal right to reject the check and ask for the other legal tender such as cash