United States prime rate

The note contains the statement, “This note is payable from the proceeds of my 2011 cotton crop. : This is accepted as it depicts the limitation of the payment. The note provides “for interest at 2% above the United States prime rate of interest. ”: This is allowed as in this case the interest rate is determined by way of the contract. The note provides that “payment must be made in Euros; United States dollars or other currency is not acceptable. ”: This can be acceptable as the money to be paid in terms of the currency is written here.

The note provides that “the maker hereby reserves the right to extend the due date by whatever period of time the maker determines to be financially advisable. ”: This can be acceptable as the payment period can be accepted by way of the contract. A check is payable to “The weather is nice today. ”: The negotiable instrument needs the name to whom the payment will be made. In this case, this is done and this is acceptable. This may not be negotiable by the third party. A check states, “Pay to Walter Bishop. ”: The negotiable instrument needs the name to which the payment will be made.

In this case, this is done and this is acceptable. This may not be negotiable by the third party. (MASTERING NEGOTIABLE INSTRUMENTS ,2008; USA Commercial Law at La Trobe, n. d. ) Question Five On June 1, 2010, Joan Maker issues a negotiable instrument payable to Harry Seller on July 1, 2010 representing the purchase price of goods Maker has bought from Seller for use in Maker’s business. The goods were faulty and there was a total failure of consideration. On June 15, 2010, Seller negotiated the instrument to George who takes as a holder in due course.

On July 10, 2010, George gives the instrument to his nephew, Sam, as a birthday present. Sam presents to Maker for payment and Maker refuses to pay because of the faulty goods. Accordingly, Sam sues Maker. In this case, Sam is the holder in due course. The instrument has been negotiable and the instrument has been passed on to the Sam. In this case Sam falls under the purview of the holder in due course. Maker would win the lawsuit as the goods were supplied to Maker under no consideration. The absence of consideration turns the contract void.

The lawsuit would ultimately be directed to Maker and he will have to pay up for the faulty goods. Question Six Adam signed a check in the amount of USD $500 drawn on his account at Octopus National Bank (ONB) payable to the order of “Bill and Betty” to pay them for cleaning his large house. A few days later, Bill purchased an antique camera from Dan and gave Dan the $500 check as payment for the camera. Bill indorsed the check as follows, “Pay to Dan” and then signed his name. Betty did not indorse the check.

Dan deposited the check into his account at Calamari State Bank (CSB). CSB credited Dan’s account and forwarded the check to ONB for collection. ONB refused to honor the check and returned it to CSB. CSB then debited Dan’s account for USD $500 and returned the check to Dan. In this case ONB properly refused the rights of the cheque as Betty did not indorse the cheque. In the case of two parties to the cheque both have to indorse it. Yes the bank did the right thing in debiting Dan’s account as the cheque has not been cashed at ONB.

Dan has the right to sue Bill as the cheque has been dishonored. However, one thing may hold against Dan as it was his duty to properly check the instrument before forwarding it to the bank. Dan does not hold any right against Betty as he does not hold any connection with the negotiation. The onus is on Bill in this case as Betty is perhaps not informed about the negotiation. Dan has no right against Adam as Adam negotiated the cheque earlier and he dispelled any relation with the negotiable instrument. USA Commercial Law at La Trobe, n. d. )