Clint Induces David,by Fraud in the Inducement,to Make an Instrument

question 82

Multiple Choice

Clint induces David,by fraud in the inducement,to make an instrument payable to the order of Clint.Clint then negotiates the instrument to Eric,a holder in due course,and later reacquires it from Eric.In this case:

• A) Clint is a holder in due course.
• B) Clint is not a holder in due course,but he succeeds to the rights of one,because of the shelter rule.
• C) Clint does not succeed to Eric's rights as a holder in due course and remains subject to the defense of fraud.
• D) because fraud in the inducement is a real defense,it can be used against both Clint and Eric.

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Definitions:

Unearned Ticket Revenue

Income received by a company for goods or services to be delivered or performed in the future; it is considered a liability until the service is performed or goods are delivered.

Adjusting Entries

At the close of a fiscal period, entries recorded to assign revenue and costs to the actual period of occurrence.

Advance Rent

Prepaid rent, which is an amount paid prior to the period to which it relates, often accounted for as a current asset until the period to which the rent applies.

Utility Bill

A bill sent by a utility company (electricity, gas, water, etc.) charging the customer for their usage of the service.