Asked by Alejandro Bernal on May 12, 2024
Verified
Sarah gives a negotiable note for $5,000 to Roofing Contractors.Roofing cleverly alters the note to $7,000 and negotiates the note to Bigger Bank for consideration.When this alteration is discovered,discuss what recourse Bigger Bank will have against Sarah and Roofing.
Negotiable Note
A financial instrument guaranteeing payment of a specific amount, which can be transferred among parties.
Cleverly Alters
Deliberately modifies or changes something in a skillful manner to achieve a specific purpose or effect.
Recourse
The right of an individual or entity to seek compensation or legal redress in the event of a breach of contract or other legal injury.
- Identify the consequences of forgery and accountability in financial instruments.
- Assess the procedural criteria that render an instrument negotiable.
Verified Answer
JA
Jamira AllenMay 16, 2024
Final Answer :
Sarah is only liable for the original amount of the note,$5,000,unless it can be shown that she was negligent in writing it so that it could be easily altered.Roofing makes a transfer warranty to Bigger Bank that the note has not been altered and would be liable to Bigger Bank for breach of this warranty.
Learning Objectives
- Identify the consequences of forgery and accountability in financial instruments.
- Assess the procedural criteria that render an instrument negotiable.