Asked by Emily Maniccia on Apr 29, 2024
Verified
Kira, who owned a pet store, bought a number of dog leashes from a business called Happy Paws in Florida. Kira, who was somewhat unorganized, was very busy and told her assistant, Gio, to pay her bills, including the bill she owed to Happy Paws. Kira had lost the invoice. She knew that she owed Happy Paws $1,000, and simply told Gio to send Happy Paws $1,000. She told Gio she did not know the address, but that he should be able to find it on the Internet. Gio checked on the Internet and found a listing and an address for a company called Happy Paws in North Carolina. Gio sent the check for $1,000 to Happy Paws in North Carolina. The bookkeeper for Happy Paws in North Carolina did not act in bad faith and thought that the check was for goods sent to Kira. The treasurer endorsed Kira's check along with a number of other checks to ABC Financing Company in order to receive operating funds. Happy Paws in North Carolina was not affiliated with the Florida Happy Paws. In fact, Happy Paws in North Carolina sold booties for children. Happy Paws in North Carolina was also in financial difficulty and went bankrupt. Happy Paws in Florida contacted Kira regarding the $1,000 they were owed. Kira and Gio then discovered their mistake. They requested that Happy Paws in North Carolina refund the money, but bankruptcy prevented that. Kira then attempted to get the funds returned from ABC Financing. What is the most likely result regarding Kira's attempt to receive the funds from ABC Financing and why?
Misdirected Payment
Misdirected payment occurs when a payment is sent to an incorrect party or destination, either due to error or misunderstanding.
Bankruptcy
A lawful method that enables individuals or enterprises in financial distress to pursue exemption from part or all of their financial liabilities.
- Comprehend the effects of the regulations set by the FTC in the 1970s aimed at defending consumers from HDC malpractices.
- Elucidate on the Shelter Principle and its utilization in negotiable instruments scenarios.
Verified Answer
KF
Khadra FarahMay 06, 2024
Final Answer :
It is unlikely that Kira will be able to receive a refund. The reason is that ABC Financing satisfied the following requirements for holder-in-due-course status:
1. The party must be a holder of a complete and authentic negotiable instrument.
2. The holder must take the instrument for value.
3. The holder must take the instrument in good faith.
4. The holder must take the instrument without notice of defects.
1. The party must be a holder of a complete and authentic negotiable instrument.
2. The holder must take the instrument for value.
3. The holder must take the instrument in good faith.
4. The holder must take the instrument without notice of defects.
Learning Objectives
- Comprehend the effects of the regulations set by the FTC in the 1970s aimed at defending consumers from HDC malpractices.
- Elucidate on the Shelter Principle and its utilization in negotiable instruments scenarios.