Asked by Ja'Nayla Watts on Jun 10, 2024
Verified
Which of the following is the likely result if Floyd sues Anne, Rahul, and Hema?
A) The judge is likely to rule that Floyd can recover from Anne, Rahul, or Hema; but in the event Anne pays Floyd, she can recover from Rahul or Hema; and in the event that Rahul pays Floyd, he can recover from Hema.
B) The judge is likely to rule that Floyd's only option of recovery is against Hema.
C) The judge is likely to rule that Floyd's only option of recovery is against Anne because she provided the note to him, but that Anne can recover from either Rahul or Hema and that if Rahul pays Anne, he can recover from Hema.
D) The judge is likely to rule that Floyd can recover against Rahul and that Rahul may recover against Hema, but Floyd cannot recover directly from Anne because she is too far removed from the maker.
E) The judge is likely to rule that Floyd's only option for recovery is against Rahul who may then recover against Hema.
Promissory Note
A financial instrument that contains a written promise by one party to pay another party a definite sum of money either on demand or at a specified future date.
Reasonable Identification
Identification that is deemed sufficient by law or regulation to reliably establish an individual’s identity.
Notification of Dishonor
A formal notice given to the parties involved in a negotiable instrument (like a check or promissory note) indicating that payment has failed or been refused.
- Master the concepts surrounding the correct practice of presentment and the requisite notices in dealings with negotiable instruments.
Verified Answer
CM
celine macielJun 16, 2024
Final Answer :
A
Explanation :
Under the principles of negotiable instruments, when a promissory note is endorsed and transferred, each endorser is potentially liable to the holder if the maker defaults. Floyd, as the current holder, can seek recovery from Hema (the maker), Anne, or Rahul (the endorsers), depending on who is able and willing to pay. If Anne or Rahul pays Floyd, they can seek reimbursement from those before them in the chain, ultimately back to Hema, the maker. This ensures that the holder has multiple avenues for recovery, reflecting the negotiability and the guarantees implied by endorsements on the instrument.
Learning Objectives
- Master the concepts surrounding the correct practice of presentment and the requisite notices in dealings with negotiable instruments.