[Roommate Troubles] Dexter, Bernard, and Garren Were Roommates Who Do

question 10

Multiple Choice

[Roommate Troubles] Dexter, Bernard, and Garren were roommates who do not get along and decide to go their separate ways when their lease expires on May 31. Dexter owes Bernard $500 and signs a promissory note that he will pay Bernard $500 by July 1. Bernard, who owes Garren money, endorses the back of the note and writes "Pay to the order of Garren" on the back and gives the note to Garren. On July 2, Garren tells Dexter that Bernard signed the promissory note to him, so Dexter should just pay Garren the $500. Dexter refuses to pay Garren anything. Garren then tells Bernard that Dexter dishonored the note and sues Bernard for the value of the note.
-Assuming there is proper presentment and notice of dishonor, can Bernard be held liable on the promissory note?

• A) Yes, and he can sue Dexter who is primarily liable for the note.
• B) Yes, but he has no recourse against Dexter.
• C) No, only Dexter can be held liable.
• D) No, because he is not primarily liable.
• E) Garren has no recourse since he is not a holder in due course.

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Definitions:

Supply Curve

A graphical representation showing the relationship between the price of a good and the quantity of that good that producers are willing to supply.

Efficiency

The ability to produce maximum output with a given set of inputs or resources, minimizing waste and costs.

Equality

The state of being equal, especially in status, rights, and opportunities.

Output

The complete sum of products or services generated by an individual, device, company, or economic system.