Michael Issues a Check to Paula

question 9

Essay

Michael issues a check to Paula. She negotiates the check to Harold as payment for a used television. 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.
cAssume that Michael has a personal 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.

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Definitions:

Optimal Output

The level of production that maximizes a firm's profit, or the most efficient allocation of resources in producing a good or service.

Price to Clear

The price to clear is the market price at which the quantity supplied equals the quantity demanded, thereby clearing the market without leaving surplus or shortage.

Perfectly Competitive Industry

A Perfectly Competitive Industry is characterized by many sellers and buyers, free entry and exit, and a product that is identical across suppliers, leading to no single entity having market control.

Marginal Cost

The additional cost of producing one extra unit of a good or service.