Roxanna bought a stereo from Sound Electronics. She paid the purchase price of $7500 by giving a promissory note to the store. The first time that Roxanna tried to operate the stereo outside of the store, it blew up due to a defect. She therefore refuses to honour the promissory note. Which of the following statements is TRUE?
A) Because the note was given to a company, Roxanna does not have a personal defence that she can use against Sound Electronics if it attempts to sue her on the note.
B) Sound Electronics was required to mark the note as a "consumer note" if Roxanna intended to use the stereo for a business purpose.
C) Even if the promissory note was used for a consumer purchase, it may not be subject to the equities if Sound Electronics negotiated it to a holder in due course.
D) The provisions in the Bills of Exchange Act dealing with consumer bills and notes might apply if Roxanna paid with a cheque that was postdated for 15 days.
E) The provisions in the Bills of Exchange Act dealing with consumer bills and notes would not apply if Roxanna used a cheque to pay for the stereo.
Correct Answer:
Verified
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