Michael Issues a Check to Paula

question 28

Essay

Michael issues a check to Paula. She negotiates the check to Hal as payment for a used television set. Hal has no notice of any claims or defenses and takes the check in good faith. Hal indorses the check and gives it to his son as a birthday present. Is Hal's son a holder in due course? What rights does he have with respect to the check? If Michael has a defense of fraud in the inducement against Paula, can he use that defense against Hal or Hal's son?

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Definitions:

Extortion

The act of obtaining something, especially money, through threats or use of force.

Blackmail

The act of demanding payment or another benefit from someone in return for not revealing compromising or damaging information about them.

Building Code

Regulations established by local governments detailing the standards for construction and safety of buildings and structures.

Petty Offense

A minor crime that is punishable by a small fine and/or imprisonment for less than six months in a jail.