DEBATE: FOR HOLDER IN DUE COURSE DOCTRINE

Allen buys a car, as is, from Bob and writes Bob a promissory note for $10,000 to be paid in one year.Bob immediately sells the $10,000 note to Catherine, who has had no known involvement in the sale of the car,for $8000, making Catherine the Holder in Due Course.

Within a month of the sale, Allen realizes that he has purchased a car worth no more than a few thousand dollars and stores the car in his garage.Allen sues Bob for $7,000 (the difference between the car's actual value and the purchase price)and refuses to pay Catherine more than $3,000 when the note is due.Catherine then sues Allen, also for $7,000 (the difference between the value of the note Catherine purchased and Allen's offer of $3,000).Both suits are still pending.

The Holder in Due Course doctrine essentially means (in this case and all others) that the party writing the note is left with the uncertain lawsuit and the Holder in Due Course is 100%protected.

PROPOSITIONS: The Holder In Due Course doctrine is thebestpublic policyin: (1) favoring Catherine over Allen in terms of which party must sue Bob for the lost "value" and (2) in requiring Allen to pay the full $10,000 to Catherine even if Allen loses his lawsuit against Bob.

PLEASE NOTE THE QUESTION IS NOT WHETHER ALLEN IS LIKELY TO SUCCEED IN ANY LAWSUIT AGAINST ALLEN (UNLIKELY) OR WHETHER ALLEN HAS ANY LEGAL DEFENSE TO FULL LIABILITY TO CATHERINE (VERY UNLIKELY).THE QUESTION IS WHETHER CHOOSING THESE "WINNERS AND LOSERS" REFLECTS GOOD PUBLIC POLICY.THE LAW, AND, THEREFORE PUBLIC POLICY, COULDALLOW FOR OTHER OPTIONS.PLEASE ARGUE YOUR POSITION ON BOTH QUESTIONS VIGOROUSLY AND RESPECTFULLY.