Edie fraudulently induces Franco, a consumer, to sign a promissory note to buy a speedboat. Edie sells the note to Gus, who takes it for value, in good faith, and without knowledge of the fraud. With respect to the defense against payment on the note to Edie, Franco can

Question

Edie fraudulently induces Franco, a consumer, to sign a promissory note to buy a speedboat. Edie sells the note to Gus, who takes it for value, in good faith, and without knowledge of the fraud. With respect to the defense against payment on the note to Edie, Franco can​

Quizplus · Accepted Answer

Franco can assert the defense of fraud against Edie, but not against Gus. Since Gus took the note for value, in good faith, and without knowledge of the fraud, he is considered a holder in due course and is entitled to enforce the note against Franco. Therefore, the best choice for Franco is to assert the defense against Edie, but not against Gus.

Edie Fraudulently Induces Franco, a Consumer, to Sign a Promissory