In a scenario where A writes a check to B; B uses it to pay C; C does not encash for years; after a bank failure and A's death, how is B's obligation extinguished?

In a scenario where A writes a check to B; B uses it to pay C; C does not encash for years; after a bank failure and A's death, how is B's obligation extinguished?

• A. Prescription
• B. Impossibility of performance
• C. Carelessness
• D. It was not extinguished.

Answer: (D)

The thing being tested is how a negotiable instrument (a check) creates and can extinguish an obligation. A check is a promise to pay on demand. That obligation to pay the drawer (A) continues until it is discharged by actual payment, a formal release, or a legal equivalent (like a valid statute of limitations starting to run once a demand is made and suit is filed). Simply letting years pass with the payee not encashing, or an intervening bank failure, or the drawer’s death, does not automatically erase that liability. In this scenario, no actual payment occurred because C never encashed the check. The bank’s later failure and A’s death do not automatically discharge B’s liability. The obligation remains unless a proper discharge occurs or the claim is extinguished by time limits only if a court action to enforce it is barred by prescription. Since none of those discharge events is triggered by the facts given, the obligation is not extinguished. That’s why the best answer is that the obligation was not extinguished.

The thing being tested is how a negotiable instrument (a check) creates and can extinguish an obligation. A check is a promise to pay on demand. That obligation to pay the drawer (A) continues until it is discharged by actual payment, a formal release, or a legal equivalent (like a valid statute of limitations starting to run once a demand is made and suit is filed). Simply letting years pass with the payee not encashing, or an intervening bank failure, or the drawer’s death, does not automatically erase that liability.

In this scenario, no actual payment occurred because C never encashed the check. The bank’s later failure and A’s death do not automatically discharge B’s liability. The obligation remains unless a proper discharge occurs or the claim is extinguished by time limits only if a court action to enforce it is barred by prescription. Since none of those discharge events is triggered by the facts given, the obligation is not extinguished.

That’s why the best answer is that the obligation was not extinguished.