Question

Promissory Notes

A college student, Austin Keynes, wished to purchase a new entertainment system from Friedman Electronics,Inc.Because Keynes did not have the cash to pay for the entertainment system, he offered to sign a note promising to pay $150 per month for the next six months.Friedman Electronics,eager to sell the system to Keynes, agreed to accept the promissory note, which read, “I, Austin Keynes, promise to pay to Friedman Electronics or its order the sum of $150 per month for the next six months.”The note was signed by Austin Keynes. About a week later, Friedman Electronics, which was badly in need of cash, signed the back of the note andsold it to the First National Bank of Halston.Give the specific designation of each of the three parties on this note. (See types of Negotiable Instruments)

Answer this using the IRAC writing Format

I-Describe the issue at hand (the question being asked)

R-Describe the rule that is applicable in this situation

A-Apply the rule to the facts of yor situation

C-Draw a conclusion

Answer 1

Answer for I:

Here,Austin Keynes will be Maker or Issuer as he promises to pay a definite sum I.e 150 dollars and it is assumed that he is not a minor.If Austin Keynes is a minor than total contract will be void as a minor can plead his minority and a contract with minor is Void-ab-initio.

Here,Friedman electronics will be the Payee as he got the right to get paid or order to pay.

While coming to the contract between Friedman and First National Bank of Haltson,Friedman electronics will be endorser as he possess the ownership of the instrument and transferred it to First National Bank of Haltson and the bank will be endorsee as the promissory note is made payable to it instead of first payee i.e Friedman electronics.

Answer for R:

If a promissory note contain the word Payable to certain payee or its order that it can be freely endorsed to any person and it will be a legal tender and the promissory note is valid if the maker of promissory note made it with free state of mind i.e without coerction or undue influence or so on and the maker was over 18 year of age.If a promissory note is an unconditional promise in writing made by one person to another,signed by the maker engaging to pay on demand or fixed time in determinable future in certain amount to order or to bearer will be a negotiable instrument and every negotiable instrument can be endorsed.

Answer for A:

As the promissory note contain the word Payable to "Friedman electronics or its order" it is freely transferable as it is assumed that Austin Keynes is not a minor and the promissory note in the case is a unconditional promise in writing given to one person to another and the time is in determinable future and the amount is certain and hence it is a negotiable instrument and can be endorsed.

Answer for C:

The conclusion is that all the contacts are made legally and no party has intention to decisive other party and hence All contract s will be legal tender.