Asked by Paris Smith on Jun 15, 2024
Verified
Which of the following is true regarding Anne's statement to Floyd that he must seek recovery from Rahul?
A) Anne is correct.
B) Anne is correct only if Rahul is able to pay and has not filed bankruptcy.
C) Anne is correct in stating that Floyd should seek recovery from Rahul only if Hema has filed bankruptcy because, otherwise, Floyd should be pursuing litigation against Hema.
D) Anne is correct unless the note is for over $10,000, in which case Floyd can seek recovery from her without resorting to recovery from Rahul or Hema.
E) Anne is incorrect. Floyd may seek recovery from her without first seeking recovery from Rahul.
Seeking Recovery
The act of attempting to obtain restitution or compensation for loss or damage incurred.
- Familiarize oneself with the detailed aspects of liability for those endorsing and the systematic order of liability among endorsers and producers of promissory notes.
Verified Answer
AG
Angel GuerreroJun 16, 2024
Final Answer :
E
Explanation :
Anne is incorrect because, in the chain of endorsements on a promissory note, Floyd, as the current holder of the note, has the right to seek payment from any of the endorsers (Anne, Rahul) or the maker (Hema) once the note has been dishonored. There is no requirement for Floyd to seek recovery from Rahul before Anne.
Learning Objectives
- Familiarize oneself with the detailed aspects of liability for those endorsing and the systematic order of liability among endorsers and producers of promissory notes.