Landlord with special indorsement to the landlord

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Reference no: EM132238000

Business Law

1. A check drawn by Cullen for $500 is made payable to the order of Jordan and issued to Jordan for goods Jordan sold to Cullen. Jordan owes his landlord $500 in rent and transfers the check to his landlord with a special indorsement to the landlord. Determine whether the landlord is a holder in due course. Be sure to give the legal justification for your response.

2. Determine whether the landlord in question #2 will be entitled to payment from Cullen if the following are true:

a. Cullen has been adjudged insane and only his guardian should be making contracts for him.

b. Cullen is a minor and is trying to disaffirm the contract.

3. A check drawn by Cullen for $500 is made payable to the order of Jordan and issued to Jordan for goods Jordan sold to Cullen. Jordan owes his landlord $500 in rent and transfers the check to his landlord with a blank indorsement. After the transfer of the check of the landlord, the landlord is informed by Cullen that the goods provided by Jordan were nonconforming. Determine whether the landlord is a holder in due course. Be sure to give the legal justification for your response. Will Cullen be required to pay the landlord?

4. How would your answer to #3 change, if at all, if the landlord knew that the goods provided by Jordan were nonconforming at the time of the transfer.

5. A check drawn by Cullen for $500 is made payable to the order of Jordan and issued to Jordan for goods Jordan sold to Cullen. Jordan owes his landlord $500 in rent and transfers the check to his landlord with a blank indorsement. The landlord gives his niece the check as a gift. Determine whether the niece is a holder in due course. Be sure to give the legal justification for your response.

6. Celine issued a ninety-day negotiable promissory note payable to the order of Hayden. The amount of the note is left blank, pending a determination of the amount of money Hayden will need to purchase a used car for Celine. Celine authorizes any amount not to exceed $2,000. Hayden, without authority, fills in the note in the amount $5,000 and thirty days later sells the note to First National Bank of Oklahoma for $4,850. Hayden does not buy the car and leaves the state. First National Bank has no knowledge that the instrument was incomplete when issued or that Hayden had no authority in the amount of $5,000. Does the bank qualify as a holder in due course? Explain.

7. Through negotiation, Emilio (without knowledge of such dishonesty) has received from dishonest payees two checks:

a. The drawer issued a check to the payee for $9. The payee cleverly altered the amount on the check from $9 to $90 and changed the written word from “nine” to “ninety.”

b. The drawer issued the check to the payee without filling in the amount. The drawer authorized the payee to fill in the amount for no more than $90. The payee filled in the amount of $900.

Discuss whether Emilio, by giving value to the payees can qualify as a holder in due course of the checks. Also, discuss whether Emilio will be subject to the defenses in (a) and (b).

Reference no: EM132238000

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