Wes, a Neighbour of Stan, Wished to Borrow a Sum

question 30

True/False

Wes, a neighbour of Stan, wished to borrow a sum of money from a local bank. Stan was quite wealthy, but elderly, with very poor eyesight. He frequently requested Wes to read his newspaper to him when Wes would drop by for a visit, because reading bothered his eyes. One evening, Wes placed a paper before Stan, and explained to him that he wished to borrow a sum of money but required a letter of reference before the bank would make the loan. He requested Stan to sign the paper to satisfy this requirement. Stan trusted his friend Wes and signed the paper at his request without reading it. Unknown to Stan, the paper was a guarantee of Wes's indebtedness, and not a letter of reference. Wes later defaulted on his debt. If Wes had told Stan that the paper was a guarantee for $1,500 when it was in fact for $2,000, Stan could still successfully plead non est factum as a defence.

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Definitions:

Operating Activities

Transactions related to the core business functions of a company, such as sales and purchase of goods and services.

Cash Dividends

Payments made by a corporation to its shareholder members. It is the share of profits distributed in cash.

Statement Of Cash Flows

A financial document summarizing total cash inflows from operational activities and external investments alongside outflows for business operations and investment expenditures over a specific timeframe.

Investing Activities

Finance-related activities in a company that involve acquiring or disposing of long-term assets.