- McNealy purchased a refrigerator for his home from Pete’s Appliance Store for $700. McNealy paid $200 in cash and signed the following installment contract for the remaining $500, which in its entirety stated:
“January 15, 2013
I promise to pay to the order of Pete’s Appliance Store the sum of $500 in ten equal monthly installments, commencing February 15, 2013, and each 15th day of the month thereafter until fully paid.
(signed) James McNealy“
Pete negotiated the document to Household Finance Company, which took the instrument for value, in good faith, and without notice of any claim or defense of any party. After McNealy had paid two installments, the refrigerator ceased operating. McNealy wishes to recover his down payment, his first two monthly payments, and to discontinue further payments. Household Finance refuses his request and wants payments to continue. Discuss.
- The accounting department of Delta Sales Company receives an instrument that states:
“March 16, 2019.
Thirty days after date, I promise to pay to the order of cash, $700 (seven hundred and 00/100 dollars), in Denver, Colorado, with interest at the rate of 7% (seven percent) per year. This debt arose from the purchase of a computer. Due: April 15, 2019.
[Signed] Edward Jones.”
What type of instrument is this? Is it negotiable? (why or why not?)
- Karen sold her used car for $5,000 cash which she gave to her brother Frank for safekeeping. A few days later, Karen decided to pay Carl Contractor who had re-modeled Karen’s kitchen. Rather than retrieving the cash from her brother, Karen gave Carl the document listed below. Carl immediately negotiated this document to the lumber yard to pay for materials he had charged at the lumber yard. When the lumber yard gave this document to Frank thirty days later and requested payment—Frank refused to pay.*******************************************************************
“TO: Brother Frank April 4, 2021
Thirty (30) days from date, pay to the order of Carl Contractor the sum of four thousand dollars ($4000)
What type of instrument is this, and does the lumber yard have the right to be paid? Discuss
- On November 1st, Perkins installed a burglar alarm system in Moore’s store. Moore signed a negotiable promissory note payable to the order of Perkins for $1100, the purchase price due on December 1. On November 8 Perkins returned to Moore’s store and told Moore that he needed money and would accept $1000 as payment in full. Moore paid Perkins the $1000, but forgot to obtain the note from Perkins.
On November 10, after receiving his inventory bill from the Harris Burglary Alarm Factory and not having any additional ready cash, Perkins indorsed the ‘Moore’ note in blank and transferred it to Harris for value. Two days later, Harris learned that Moore had already paid Perkins for the note, whereupon he gave the note to Valerie, as a present, without further indorsement. Valerie was not aware of Moore’s prior payment of the note.
Valerie goes to Moore’s store and demands her $1100. Discuss.
- Brenda finds Bill’s wallet which contains many credit cards and also a debit card, plus a handwritten list of PIN #’s. Brenda goes on a spending spree with Bill’s cards—charging $1750 on a credit card, and $2,300 on Bill’s debit card. Bill doesn’t discover that he has lost his wallet until 3 days later on a Friday night and notifies his bank first thing Monday morning, as well as the credit card company the same day.
Discuss how the card company and the bank will handle Bill’s ‘problem’.