Holder in Due Course Through negotiation, Emilio has received from dishonest pay

Question

Holder in Due Course

Through negotiation, Emilio has received from dishonest payees two checks with the following histories: (a) The drawer issued a check to the payee for $9. The payee cleverly altered the numeral amount on the check from $9 to $90 and the written word from "nine" to "ninety." (b) The drawer issued a 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 these checks. (See Holder on Due Course)

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

Explanation / Answer

I – The issue in these 2 scenario proves that there is a fraud happened. Even though the check was given initially for only $9, the amount was altered to $90 and instead of $90 to be authorized the check updated for $900 which is something against the law. The two parties involved are drawer and payee (Emillo)

R – In this situation it is clear that there is a fraud and if the same amount is withdrawn by Emillo, the drawer can file a case against Emillo and fight in the court for justice. This is something illegal which is done by Emillo and is liable for penalty

A – The analysis is very simple. This is a straight forward situation where Emillo has tried to cheat the drawer. If the check is submitted for collection of money, Emillo will be punished. The check was given with good faith by the drawer

C – The check was given by the drawer to Emillo and will be liable to become a holder in due course of these checks. On the other side for the checks given in good faith are miss-used by payee and will be liable for punishment at the court of law

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