Question
On September 1 st , Alan sells Barbara a Picasso sketch. Barbara signs a promissory note payable to Alan for $300,000 on November 1st. However,
On September 1st, Alan sells Barbara a Picasso sketch. Barbara signs a promissory note payable to Alan for $300,000 on November 1st. However, Alan knows that the sketch is a reproduction, not an original. Alan then sells the promissory note to Clarissa for $250,000 on October 1st. Clarissa does not know that the sketch is not an original. On October 2nd, Clarissa gives the note to her husband Donald for his birthday. Donald is friends with Alan and knows that the sketch is a reproduction.
1. Is Donald technically a holder in due course? Why or why not?
2. Is Donald entitled to collect on the note from Barbara and, if so, how much? Explain your answer.
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