[Diamond Debacle] Prida owns Prida's Jewelry Store. Charla is Prida's top diamond purchasing agent and usually signs promissory notes on Prida's behalf. Unbeknownst to Prida, Charla is considering opening her own diamond business. While at a convention in New York, Charla signs a promissory note with Jirah's Diamonds for the cost of several newly cut stones. Although Prida's Jewelry Store's name does not appear on the note, Jirah is aware that Charla works for Prida's. Charla decides not to quit her job at Prida's and Jirah presents Prida's with the note and demands payment.
-Can Charla be held personally liable for the note?
A) Yes, agents are personally liable when they sign their own name and omit the name of the principal.
B) Yes, Charla may be personally liable because Jirah is a holder in due course and was not aware Charla signed on behalf of Prida's.
C) No, Jirah is not a holder in due course and Charla will not be held liable if she can show that it was not Prida's intent to hold Charla personally liable.
D) No, agents can never be personally liable even if the principal's name does not appear on the note.
E) No because Jirah was a holder in due course.
Correct Answer:
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