Elvin fraudulently induces Franz,a consumer,to sign a promissory note to buy a speedboat. Elvin sells the note to Gaston,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 Elvin,Franz can

Question

Quizplus · Accepted Answer

Franz can assert the defense of fraud against Elvin and also against any subsequent holder of the promissory note. The defense of fraud is a personal defense that follows the note, and it can be asserted by Franz against anyone who takes it from Elvin, even a holder in due course like Gaston. Therefore, Franz can assert this defense against Gaston and avoid payment on the note. Options B, C, and D are not applicable in this scenario.

Elvin Fraudulently Induces Franz,a Consumer,to Sign a Promissory Note to Buy