Question

A promissory note was executed by Billy when he bought his house. He financed the purchase with No Fraud National Bank. This purchase was in 2017 and the note was for 360 equal monthly payments, with a fixed rate of interest, with the payments due the first of each month, beginning on February 1, 2017. No Fraud sold the note to Investments, Inc on February 15, 2017. Investments, Inc sold the note to We Buy Notes on July 1, 2017. On September 1, 2018, We Buy Notes sold the note to Individual Investor. Individual Investor gave the note to his son on the son’s 21st birthday on December 10, 2018. On January 1, 2019 Billy missed his house payment when he lost his job. He has not made a payment since that time.

A. Fully describe the commercial paper rules and draw the picture of each transfer and/or negotiation of this paper. What rights does son have as to payment of the commercial paper? Fully explain the rights and obligations of each purchaser of this paper as described in this question.

B. What rights and obligations does No Fraud National have in this case, solely dealing with the commercial paper which shows No Fraud National as the payee?

Answer 1

DRAWEE

A person to whom a bill of exchange is addressed, and who is requested to pay the amount of money therein mentioned.

The drawee may be only one person, or there may be several persons. The drawee may be a third person, or a man may draw a bill on himself. The drawee should accept or refuse to accept the bill at furthest within twenty-four hours after presentment, but it is said the holder is entitled to a definite answer if the mail go out in the meantime. In case the bill has been left with the drawee for his acceptance, he will be considered as having accepted it if he keep the bill a great length of time, or do any other act which gives credit to the bill, and induces the holder not to protest it; or is intended as a surprise upon him and to induce him to consider the bill as accepted. When he accepts it, it is his duty to pay it at maturity.

DRAWER

The party who makes a bill of exchange.

The obligations of the drawer to the drawee and every subsequent holder lawfully entitled to the possession, are; that the person on whom he draws is capable of binding himself by his acceptance; that he is to be found at the place where he is described to reside, if a description be given in the bill; that if the bill be duly presented to him, he will accept in writing on the bill itself, according to its tenor; that he will pay it when it becomes due if presented in proper time for that purpose; and that if the drawee fail to do either, he, the drawer, will pay the amount, provided he have due notice of the dishonor. The engagement of the drawer of a bill is in all its parts absolute and irrevocable.