Eli5. What stops a 1000 dollar check made out to cash from being used as a 1000 dollar bill.

Question

A bit confusing but what I mean by this is say, a guy writes a 1000 dollar check (made out to cash)to buy a quad. The guy receiving the check, instead of cashing it out, uses the original check to then go buy his own quad and so on.

In: Economics

Answer 1

Would the second seller trust that a stranger (the first buyer, who is a third party to the second sale) has enough money to cover the check? I think most people would require that the payment be made directly by the buyer and not by a third party.