A & D,Inc.wrote a negotiable note payable to Vicy,Inc.A & D left the amount of the note blank because it was uncertain as to amount of the applicable tax.Vicy completed the note for $3,000 more than A & D actually owed for the products it purchased.The note was negotiated to a holder in due course.A & D will not have to honor the note as this constituted fraud in the execution.

Question

Quizplus · Accepted Answer

A & D will likely have to honor the note because the holder in due course is protected from certain defenses, including fraud in the inducement, but not fraud in the execution. However, leaving the amount blank and allowing Vicy to fill it in could be seen as giving Vicy the authority to complete the note, making it difficult to claim fraud in the execution.

A & D,IncWrote a Negotiable Note Payable to Vicy,Inc