TriColor purchased an industrial stamping machine from Vicy, Inc. TriColor paid for the machine with a negotiable note. The note was payable to the order of Vicy, Inc. Vicy, Inc. indorsed the note and gave it to CCLoans to satisfy a debt. CCLoans knew nothing about the contract between TriColor and Vicy, Inc. CCLoans indorsed the note and gave it to Great River Youth Club as a charitable donation. When Great River Youth Club presented the note for payment on its due date, TriColor refused to pay, claiming that the stamping machine was defective.
A. Is Great River Youth Club a holder in due course?
b. Will TriColor be able to avoid liability to Great River Youth Club on the basis that the machine was defective?

Question

TriColor purchased an industrial stamping machine from Vicy, Inc. TriColor paid for the machine with a negotiable note. The note was payable to the order of Vicy, Inc. Vicy, Inc. indorsed the note and gave it to CCLoans to satisfy a debt. CCLoans knew nothing about the contract between TriColor and Vicy, Inc. CCLoans indorsed the note and gave it to Great River Youth Club as a charitable donation. When Great River Youth Club presented the note for payment on its due date, TriColor refused to pay, claiming that the stamping machine was defective. 
 A. Is Great River Youth Club a holder in due course? 
b. Will TriColor be able to avoid liability to Great River Youth Club on the basis that the machine was defective?

Quizplus · Accepted Answer

The Answer of TriColor purchased an industrial stamping machine from Vicy, Inc. TriColor paid for the machine with a negotiable note. The note was payable to the order of Vicy, Inc. Vicy, Inc. indorsed the note and gave it to CCLoans to satisfy a debt. CCLoans knew nothing about the contract between TriColor and Vicy, Inc. CCLoans indorsed the note and gave it to Great River Youth Club as a charitable donation. When Great River Youth Club presented the note for payment on its due date, TriColor refused to pay, claiming that the stamping machine was defective. 
 A. Is Great River Youth Club a holder in due course? 
b. Will TriColor be able to avoid liability to Great River Youth Club on the basis that the machine was defective?

TriColor Purchased an Industrial Stamping Machine from Vicy, Inc