Question 1

Ten-year-old Felicity fell in love with a golden retriever puppy which she saw in the window of Pet World.She decided to use the money she had saved from her paper route to buy the dog and wrote a $300 check,payable to Pet World.Does Pet World qualify as a holder in due course?

Accepted Answer

The answer of Ten-year-old Felicity fell in love with a...

Question 2

LeVoe wrote a check for $1,200 to the order of Henry Smith and delivered it to Smith in payment for a used car that Smith said had a rebuilt engine.Smith indorsed the check and delivered it to Kraus.LeVoe stopped payment on the check when she discovered that the engine had not been rebuilt.Analyze the case.

Accepted Answer

The answer of LeVoe wrote a check for $1,200 to...

Question 3

Bob purchases a $1,000 negotiable promissory note from a stranger for $100 that appears to be valid.Will Bob qualify as a holder in due course?

Accepted Answer

The answer of Bob purchases a $1,000 negotiable promissory note...

Question 4

Shane carefully wrote a check for $300 and gave it to Ethos Art Gallery for the purchase of a painting.Ethos raised the check to read $800.Shane's bank honored the altered check.Analyze the course of actions Shane could take.

Accepted Answer

The answer of Shane carefully wrote a check for $300...

Question 5

Big Bank is unable to provide notice of dishonor for three days because a fiber optic cable was accidentally cut by a construction worker.Will Big Bank be liable for its failure to act in a timely manner?

Accepted Answer

The answer of Big Bank is unable to provide notice...

Question 6

Tammy purchases a promissory note that has numbers scratched out and rewritten.What legal problem will Tammy encounter in claiming to be a holder in due course of the note?

Accepted Answer

The answer of Tammy purchases a promissory note that has...

Question 7

Dishonor means:
A)fraud in the payment method.
B)deception in the amount of payment.
C)refusal to pay a negotiable instrument.
D)an extension of payment.

Accepted Answer

Dishonor refers to the refusal to pay a negotiable instrument like a check or a promissory note. It could happen due to several reasons like insufficient funds, a stop payment order, or the instrument being expired or altered. Choices A and B refer to fraud and deception in payment, respectively, which could also lead to dishonor, but they are not the exact meaning of the term. Choice D is incorrect as an extension of payment does not lead to dishonor.

Question 8

A demand negotiable note for $500 issued by Sabin and given to Norm is altered to read $5,000 and subsequently presented for payment by Bridget,a holder in due course.Discuss the case.

Accepted Answer

The answer of A demand negotiable note for $500 issued...

Question 9

Callaghan bought a bedroom set from a furniture store and signed a consumer credit contract agreeing to pay $150 in 12 monthly installments.The furniture store immediately negotiated the credit contract to a finance company,with which it had an arrangement,and received payment.The furniture turned out to be defective.Discuss if Callaghan can use the defense of defective furniture against the furniture store and the finance company for the money owed.

Accepted Answer

The answer of Callaghan bought a bedroom set from a...

Question 10

Charles writes a check payable to Jane on his account at Friendly Bank.Friendly accepts the check,but subsequently determines that there are insufficient funds in Charles' account to pay the check.Explain what liability Charles has.

Accepted Answer

The answer of Charles writes a check payable to Jane...

Question 11

In exchange for some illegal drugs,Popka wrote a $500 check to White.Immediately thereafter,Popka stopped payment on the check.Can White recover the $500 from Popka in court? Explain.

Accepted Answer

The answer of In exchange for some illegal drugs,Popka wrote...

Quiz 17: Holders in Due Course,defenses,and Liabilities