McGuires to recover on the note held as security for the Tursis’ promissory note. Discuss whether the instrument is negotiable.  

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McGuires to recover on the note held as security for the Tursis’ promissory note. Discuss whether the instrument is negotiable.  

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Sandra and Thomas McGuire entered into a purchase and sale agreement for “Becca’s Boutique” with Pascal and Rebecca Tursi. The agreement provided that the McGuires would buy the store for $75,000, with a down payment of $10,000 and the balance of $65,000 to be paid at closing on October 5, 2017. The settlement clause stated that the sale was contingent upon the McGuires’ obtaining a Small Business Administration loan of $65,000. On September 4, 2017, Mrs. McGuire signed a promissory note in which the McGuires promised to pay to the order of the Tursis and the Green Mountain Inn the sum of $65,000. The note specified that interest payments of $541.66 would become due and payable on the fifth day of October, November, and December 2017. The entire balance of the note, with interest, would become due and payable at the option of the holder if any installment of interest was not paid according to that schedule.
 
The Tursis had for several months been negotiating with Parker Perry for the purchase of the Green Mountain Inn in Stowe, Vermont. On September 7, 2017, the Tursis delivered to Perry a $65,000 promissory note payable to the order of Green Mountain Inn, Inc. This note was secured by transfer to the Green Mountain Inn of the McGuires’ note to the Tursis. Subsequently, Mrs. McGuire learned that her Small Business Administration loan had been disapproved. On December 5, 2017, the Tursis defaulted on their promissory note to the Green Mountain Inn. On June 11, 2017, PP, Inc., formerly Green Mountain Inn, Inc., brought an action against the McGuires to recover on the note held as security for the Tursis’ promissory note. Discuss whether the instrument is negotiable.

Explanation & AnswerSolution by a verified expert

Explanation

The notation may not be due on request or at a particular time as it may not provide for reimbursement of principal in that particular time period. In this case, Person P may assert the powers as a contract agent nevertheless as that person may have the same power as that of a transferor, despite of thefact that the notation is not a passable tool.

Verified Answer

Under U.C.C., the due notation may not be a flexible tool. The amount may be due upon the creator's non-payment, which may be at an undefined time span as per the advancement statute.

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