Question: For three weeks in a row, Peyton wrote a check to his yoga instructor, Eli....

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Question: For three weeks in a row, Peyton wrote a check to his yoga instructor, Eli. Unfortunately, each week Eli changed the amount of the check from $50 to $150 before depositing it. Because of these alterations, Peyton's checking account was overdrawn, but the bank kept honoring Eli's checks anyway. The overdraft caused Peyton's check to the neighbor- hood dry cleaners to bounce, so he was banned from taking his clothes there. He then had to pay more to have his clothes cleaned at a different cleaners. What is the bank's liability? Strategy: Here, three rules are involved: the bank's duty to pay, its liability for altered checks, and wrongful dishonor. Result: The bank has the right to pay checks, even if the payment causes an overdraft. So it would have no liability to Peyton for failing to bounce the checks to Eli, if those checks had really been for $150. The bank is, however, liable for $100 on each check-the difference between the amount Peyton wrote and the amount Eli received. As for the checks to the dry cleaners, the bank wrongfully dishonored them because technically, Peyton had enough money in his account to cover them. Therefore, the bank is responsible for his more expensive dry cleaning.