Assume in problem 1 that Jack gives Golf Inc., assignment help

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Business Finance

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1. Golf Inc. manufactures golf balls. Jack orders 1,000 balls from Golf and promises to pay $4,000 two weeks after delivery. Golf Inc. delivers the balls and assigns its contract rights to First Bank for $3,500. Golf Inc. then declares bankruptcy. May First Bank collect $3,500 from Jack? Explain.

2. Assume in problem 1 that Jack gives Golf Inc. a nonnegotiable note for $3,500 and Golf sells the note to the bank shortly after delivering the balls. May the bank collect the $3,500? Would the result be different if the note were negotiable? Explain.

3. State whether the following provisions in an instrument otherwise in the proper form make the instrument nonnegotiable and explain why:

a. A note stating, “This note is secured by a mortgage of the same date on property located at 1436 Dayton Street, Jameson, New York”

b. A note for $25,000 payable in twenty installments of $1,250 each that provides, “In the event the maker dies all unpaid installments are cancelled”

c. An instrument reading, “I.O.U., Rachel Donaldson, $3,000”

d. A note reading, “I promise to pay Rachel Donaldson $3,000”

e. A note stating, “In accordance with our telephone conversation of January 7th, I promise to pay Sally Wilkenson or order $1,500”


4. Mike signed and delivered a note for $9,000 to Paul Payee in exchange for Paul’s tractor. Paul transferred
the note to Hilda, who promised to pay $7,500 for it. After Hilda had paid Paul $5,000 of the promised
$7,500, Hilda learned that Mike had a defense: the tractor was defective. How much, if anything, can
Hilda collect from Mike on the note, and why?

5. Contractor contracted with Betty Baker to install a new furnace in Baker’s business. Baker wrote a check

for $8,000 (the price quoted by Contractor) payable to Furnace Co., which Contractor delivered to
Furnace Co. in payment of his own debt to it. Furnace Co. knew nothing of what went on between
Contractor and Baker. When Contractor did not complete the job, Baker stopped payment on the check.
Furnace Co. sued Baker, who defended by claiming failure of consideration. Is this a good defense against
Furnace Co.?

6.Benson purchased a double-paned, gas-filled picture window for his house from Wonder Window, making a $200 deposit and signing an installment contract, which is here set out in its entirety:

October 3, 2012
I promise to pay to Wonder Window or order the sum of $1,000 in five equal installments of $200.
[Signed] Benson

Wonder Window negotiated the installment contract to Devon, who took the instrument for value, in good faith, without notice of any claim or defense of any party, and without question of the instrument's authenticity. After Benson made three payments, the window fogged up inside and was unacceptable. Benson wants his money back from Wonder Window, and he wants to discontinue further payments. Can he do that? Explain.

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Explanation & Answer

Attached.

Q1:
Yes, First Bank can collect the money from Jack. Contracts rights are transferable. Once a party
transfers its rights to another, the other party possesses the contract and thus has a bargaining
power to the contract.

Q2:
The bank won’t be able to collect the money if the document was non-negotiable. A nonnegotiable note is not transferable to...


Anonymous
Really useful study material!

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