Question

In: Operations Management

1. A check drawn by Cullen for $500 is made payable to the order of Jordan...

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.

1B. 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.

Solutions

Expert Solution

Landlord is a holder in due course. The requirements for holder in due course are that the holder received the instrument for value, in good faith and without notice that it is defective. Here the landlord has acquired the instrument for value as it is given to him as a mean to pay the rent and the landlord has accepted the instrument in good faith. He is not aware that the instrument is void as it is passed to him by Jordan and not Cullen. The minority status of Cullen makes the instrument voidable and the adjudged insanity of Cullen makes it void. But landlord does not know about these and hence he becomes a holder in due course by fulfilling the requirements.

But the landlord will not be able to enforce the instrument and as it is void due to the fact that the instrument is issued by a person who is mentally incompetent declared by court. Mental incapacity is a universal defense for HDC though minority depends on state laws. The check is unenforceable by any holder or HDC if it is void from the beginning. Hence the landlord is not entitled for payment.


Related Solutions

Henrietta is a holder of a check originally payable to the order of Betty.  These indorsements appear...
Henrietta is a holder of a check originally payable to the order of Betty.  These indorsements appear on the back: /s/Betty Pay to the order of House /s/Daugherty /s/House /s/Humble Is the instrument currently order or bearer paper (in Henrietta’s hands)?  Fully explain (i.e., with each indorsement in succession, is it blank or special indorsement AND is the paper made order paper or bearer paper).
Ann, agent/employee for Best Insurance Company, Inc. accepts a check from a customer made payable to...
Ann, agent/employee for Best Insurance Company, Inc. accepts a check from a customer made payable to her (Ann) in payment for the premium on an insurance policy. Prior to depositing the check in the company’s bank account, Ann indorses the check as follows: "The Best Insurance Company, Inc. by Ann, agent." Assuming that Ann has authority to indorse company checks, a. Ann is the only payee as she indorsed the check with her name. b. Neither Paula nor Best Insurance...
4. A Corporation draws a check payable to First Bank. The check is given to an...
4. A Corporation draws a check payable to First Bank. The check is given to an officer of Corporation (known to Bank), who is instructed to deliver it to Bank in payment of a debt owed by Corporation to Bank. Instead, the officer, intending to defraud Corporation, delivers the check to Bank in payment of his personal debt. Bank has received funds of Corporation that have been used for the personal benefit of the officer. Corporation asserts a claim to...
River writes a check for $200 payable to "Cash". He puts the check into his pocket...
River writes a check for $200 payable to "Cash". He puts the check into his pocket and drives to his bank (Wells Fargo) to cash the check. As he gets out of the car in the bank's parking lot, the check slips out and falls to the pavement. Jessie walks by moments later, picks up the check, and later that day delivers it to Ainsley, to whom he owes $200. Ainsley indorses the check "For deposit only" [Signed Ainsley Smith],...
The following information was drawn from the year-end balance sheets of Jordan Trading Company: Account Title...
The following information was drawn from the year-end balance sheets of Jordan Trading Company: Account Title 2017 2016 Investment securities $ 36,800 $ 28,300 Equipment 225,000 214,500 Buildings 862,000 948,500 Land 88,500 49,500 Additional information regarding transactions occurring during 2017: Investment securities that had cost $5,130 were sold. The 2017 income statement contained a loss on the sale of investment securities of $610. Equipment with a cost of $46,000 was purchased. The income statement showed a gain on the sale...
- What is the order of precedence between discretionary access check and Mandatory integrity check? Please...
- What is the order of precedence between discretionary access check and Mandatory integrity check? Please explain? - Suppose kkk.exe running with low integrity downloads an executable from unknownsite.com. can the download executable write to %SystemRoot%\System32? Why or Why not?
A sample of n = 36 observations is drawn from a normal population, with  = 500 and  =...
A sample of n = 36 observations is drawn from a normal population, with  = 500 and  = 42. Find P(500 < X̅ < 510). a. 0.0764 b. 0.8756 c. 0.9236 d. 0.7556 e. 0.4236
The rod shown below is made of two materials. The figure is not drawn to scale....
The rod shown below is made of two materials. The figure is not drawn to scale. Each conductor has a square cross section 10.00 mm on a side. The first material has a resistivity of 4.00×10-8Ω∙m and is 50.0 cm long, while the second material has a resistivity of 6.00×10-8 Ω · m and is 80.0 cm long. If a potential difference of 100V is applied between the front and the back faces, determine the following physical quantities: total amount...
A solution is made by mixing exactly 500 mL of 0.153 M NaOH with exactly 500...
A solution is made by mixing exactly 500 mL of 0.153 M NaOH with exactly 500 mL of 0.100 MCH3COOH. Calculate the equilibrium concentration of the species below. Ka of CH3COOH is 1.8 ×10−5 [H+]=? M [OH-]=? M [CH3COOH]=? M [Na+]=? M [CH3COO−]=? M
A solution is made by mixing exactly 500 mL of 0.149 M NaOH with exactly 500...
A solution is made by mixing exactly 500 mL of 0.149 M NaOH with exactly 500 mL of 0.100 M CH3COOH. Calculate the equilibrium concentration of the species below. Ka of CH3COOH is 1.8 X 10-5 [H+], [OH-], [CH3COOH], [Na+], [CH3COO-} enter answer in scientific notation.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT