Statham drew a check. The payee indorsed it to Kemp Motor Sales. Statham then stopped payment on the check on the grounds that there was a failure of Chapter 30 Liability of the Parties Under Negotiable Instruments 681 consideration for the check. Kemp sued Statham on the check. When Statham raised the defense of failure of consideration, Kemp replied that he was a holder in due course. Statham claimed that Kemp could not recover because Statham learned of his defense before Kemp deposited the check in its bank account.

Discuss the parties’ arguments and rights in this situation. [Kemp Motor Sales v Statham, 171 SE2d 389 (Ga App)]

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