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Question
Michael issues a check to Paula. She negotiates the check to Harold as payment for a used television set. Harold has no notice of any claims or defenses and takes the check in good faith. Harold indorses the check and gives it to his son as a birthday present.a. Is Harold's son a holder in due course? Explain.
b. What rights does Harold's son have with respect to the check? Why? Explain.
c. Assume that Michael has a defense of fraud in the inducement against Paula. Can he use that defense against Harold? Can he use that defense against Harold's son? Explain.
Answer
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