Reference no: EM133613656

Question

An advantage of negotiable instruments they are easily transferrable by negotiation. However, holders and holders in due course have defenses to payment on an instrument. Virginia decided that she would like to buy new living room furniture. She sold her old couch to Sven which he paid for with a check for $300. Virginia picked out a new living room set Big Tent Furniture, which cost $3,300. To pay for the new furniture Virginia indorsed check from Sven by signing her name on the back of the check and gave it to Big Tent. For the remaining $3,000 Big Tent had Virginia sign a promissory note in which she would pay back the $3,000 plus interest in equal monthly installments for the next fifteen months. Big Tent, in order to have better cash flow decided to sell the promissory note at a discount to First Factoring. Kevin, the owner of Big Tent, negotiated the loan by signing his name and "payable to First Factoring" on the back of the note. First Factoring then packaged the promissory note with several other notes and negotiated the sale of the loans to investors. Kevin then gave the check for $300 to his.