Mark writes a check to Sally, intending to use it to pay Sally for babysitting Mark's daughter next week. Sally arrives at Mark's house for a visit, and while Mark is in the bathroom, Sally discovers the check on Mark's desk and takes it. She endorses the check over to Bob in exchange for a used tennis racket. Mark ends up not hiring Sally to babysit. When he discovers the check is missing, he stops payment on it. Bob sues Mark to enforce payment of the check. Which of the following statements is true? a. Mark must pay Bob the amount of the check b. Mark could assert the defense of fraud in the inducement against Bob c. Mark can assert the defense of lack of delivery against Bob d. Mark can assert the defense of failure of consideration against Bob

Bob sues Mark to enforce payment of the check

d. Mark can assert the defense of failure of consideration against Bob.

Explanation:

Failure of consideration means that there was no consideration since intended contract between Mark and Sally which would have established the consideration upon Sally's performance was frustrated.  The contract did not take effect.  It is an established point in contract law that there must be consideration for a contract to be valid and enforceable.  Since the contract was not finalized and no performance of consideration was carried out by Sally, she had no legal right to collect Mark's check and endorse it to Bob.

Moreover, any potential contract would have been between Bob and Sally and not Mark.  So, Mark can plead failure of consideration in the relationship between him and Sally, thus rendering the check's endorsement to a third party, null and void.