Dwayne needed additional cash, but he had borrowed small sums previously from various lenders. His experience taught him that lenders charge interest at a high rate. Thus, Dwayne asked his parents for additional cash, but they replied they cannot offer him such a gift. He next turned to a friend at work, Elbert, who agreed but only if Dwayne signs an IOU.

IOU? Dwayne replied. Is that the same as a promissory note?

No, Elbert fibbed. The IOU is merely your recognition of your debt.

However, it was a promissory note.

Dwayne signed the note for $6,000 payable in one year without reading it, even though he has had experience with such instruments. Dwaynes total interest paid is $670.

Elbert, too, has experience and sold the note at a discount to Frank for $6000 plus $200.

Frank then sold the note to Gary for $6000 plus $200 plus $100. However, Gary did not know of Elberts misrepresentation. Indeed, he took the note in good faith.

For each question, you must quote from the textbook the relevant section(s) to support EACH of your answer(s). NO POINTS for this Category will be awarded without the appropriate, supporting quote(s).

(A) List or describe the meaning of a Holder.

Please quote each relevent section(s) from the textbook to support your answer and list the page numbers. In other words, no points if you do not quote verbatim the textbook and list the page numbers.

(B) Apply the rules from Question #A to Gary. Is Gary a Holder? Explain why/why not

Please quote each relevent section(s) from the textbook to support your answer and list the page numbers. In other words, no points if you do not quote verbatim the textbook and list the page numbers.

(C) List or describe the meaning of a Holder in Due Course.

Please quote each relevent section(s) from the textbook to support your answer and list the page numbers. In other words, no points if you do not quote verbatim the textbook and list the page numbers.

(D) Apply the rules from Question #C to Gary. Is Gary a Holder in Due Course? Explain why/why not

Please quote each relevent section(s) from the textbook to support your answer and list the page numbers. In other words, no points if you do not quote verbatim the textbook and list the page numbers.

=====

Read the following article on Defenses which is also attached to this project as a supplemental reading:

https://business.laws.com/negotiable-instruments/defenses/universal-defenses#:~:text=Universal%20defenses%20are%20the%20strongest,payment%20on%20that%20negotiable%20instrument

(E) Describe or define the two (2) defenses in regard to payment on an instrument, that is, the Personal Defense and the Universal Defense.

Please quote each relevent section(s) from the textbook to support your answer and list the page numbers. In other words, no points if you do not quote verbatim the textbook and list the page numbers.

(F) Could Dwayne's rushing combined with his sophistication serve to limit any possible defense he might raise? In other words, do these facts affect Dwayne raising a defense if Gary, as an HDC, were to seek payment from the Dwayne? Explain why/why not

Please quote each relevent section(s) from the textbook and/or the article to support your answer and list the page numbers. In other words, no points if you do not quote verbatim the textbook and/or the article in the supplement reading .

=====

(F) Let's change the facts! Let's suppose that Elbert never sells the note but holds it and seeks to collect it from Dwayne. Would Dwayne have any defenses to avoid paying Elbert as Holder? Why/why not?

Please quote each relevent section(s) from the textbook and/or the article to support your answer and list the page numbers. In other words, no points if you do not quote verbatim the textbook and/or the article in the supplement reading .

=====

(G) Let's again change the facts! Let's suppose that Elbert sells the note to Frank who sells the note to Gary but Gary sells it back to Elbert. Thus, Elbert is now the Holder. If Gary is an HDC, does Elbert acquire Garys HDC rights (Shelter Principle) in the note and collect from Dwayne?