Adams, who reads with difficulty, arranged to borrow $2,000 from Bell. Bell prep

Question

Adams, who reads with difficulty, arranged to borrow $2,000 from Bell. Bell prepared a note, which Adams read laboriously. As Adams was about to sign it, Bell diverted Adams’s attention and substituted the following paper, which was identical to the note Adams had read except that the amounts were different: On June 1, 2015, I promise to pay Ben Bell or order Twelve Thousand Dollars with interest from date at 16 percent. This note is secured by certificate No. 13 for one hundred shares of stock of Brookside Mills, Inc. Adams did not detect the substitution, signed as maker, handed the note and stock certificate to Bell and received from Bell $2,000. Bell indorsed and sold the paper to Fore, a holder in due course, who paid him $11,000. Fore presented the note at maturity to Adams, who refused to pay. What are Fore’s rights, if any, against Adams?

Explanation / Answer

The rights of fore are :

1) Fore can claim full amount of the negotiable instrument.

2)No prior party can allege that negotiable instrument was delivered conditionally or for a spcial purpose only.

3)No prior party can set up a defence that the negotiable instrument was lost or was obtained from him by an offence or fraud or for an unlawful consideration.

4)Holder in due course gets a valid title to the negotiable instruments even though the title of the transfer is defective.

5)No prior party can set up defence that negotiable instruments was drawn.made or endorsed by him without any consideration.

6)Fore can sue the adam for non payment.

Related Questions

Navigate

• Browse (All)
• Browse A
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.