Greg Jones buys what was represented to be a new computer from Longview Electronics. Greg issues a check to Longview Electronics for $3500 drawn on Grand Savings Bank. Greg is the drawer of the check. Longview Electronics negotiated Greg's check to Ellen's business, Circuit Box Hardware, in payment for hardware Longview Electronics had purchased from Ellen's business in order to recondition the computers that he sold. Ellen as the sole proprietor of Circuit Box Hardware had no knowledge of Greg Jones or if Greg had any personal defenses to liability to the check he wrote to Longview Electronics. Ellen was a holder that took the instrument for value, in good faith, and met the requirements of being a holder in due course.

In the meantime, Greg discovered that what he paid $3500 for was really a reconditioned laptop worth only $350. He called his bank, Grand Savings Bank, and put a stop payment order on the check. When Ellen took the check to Grand Savings Bank to cash the check and put the funds into the Circuit Box Hardware business' checking account, Grand Savings Bank refused to pay the check based on Greg's stop payment order. As a result, Ellen sued Greg on his drawer's liability. History: The trial court ruled in favor of Greg based on his personal defense of misrepresentation by Longview Electronics of the prior use of the computer as a reason for not paying Ellen. Ellen appealed the ruling of the trial court on behalf of Circuit Box Hardware.

***Assuming that Longview Electronics did not negotiate the check to Ellen (Circuit Box Hardware) and instead took the check to Grand Savings Bank to cash. Grand Savings Bank honored Greg's stop payment order. Longview Electronics sues Greg on his check for failure to pay for the computer.

What is the rule, analysis and conclusion?

ISSUE :Would Greg have a valid defense that he could assert against Longview Electronics? What's his defense?

RULE:

ANALYSIS:

CONCLUSION: