Marcus issues a negotiable promissory note payable to the order of Parish for the amount of $3,000. Parish raises the amount to $13,000 and negotiates it to Hilda for $12,000.

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Marcus issues a negotiable promissory note payable to the order of Parish for the amount of $3,000. Parish raises the amount to $13,000 and negotiates it to Hilda for $12,000.

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Marcus issues a negotiable promissory note payable to the order of Parish for the amount of $3,000. Parish raises the amount to $13,000 and negotiates it to Hilda for $12,000.
a. If Hilda is a holder in due course, how much can she recover from Marcus? How much from Parish? If Marcus’s negligence substantially contributed to the making of the alteration, how much can Hilda recover from Marcus and Parish, respectively?

Marcus issues a negotiable promissory note payable to the order of Parish for the amount of $3,000. Parish raises the amount to $13,000 and negotiates it to Hilda for $12,000.
b. If Hilda is not a holder in due course, how much can she recover from Marcus? How much from Parish? If Marcus’s negligence substantially contributed to the making of the alteration, how much can Hilda recover from Marcus and Parish, respectively?

Explanation & AnswerSolution by a verified expert

Explanation

Individual H is a holder in due course here. Because of this reason, Individual H has the right to recover the said amount from Individual M and Organization P. If Individual H was aware of the alterations that happened to the instrument while accepting it, then Individual H would have lost the status of the holder in due course, which is not the case here. If Individual M negligently caused the instrument to be tampered with, Individual H has the responsibility to pay not just the initial $3,000 but the complete amount of $13,000. However, Individual H can recover this amount from either Individual M or Organization P.

Sample Response

Individual H can recover $3,000 from Individual M and $13,000 from Organization P. If it was the negligence of Individual M that paved way for alteration in amount, Individual H can recover a total amount of $13,000 from either Individual M or Organization P.

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