TP Sells Franchises in the Old Fast Food Chain

question 365

Multiple Choice

TP sells franchises in the Old Fast Food chain. TP sells a franchise to Choi for $100,000 by cashier's check. Choi then hears that TP is going out of business and tries to stop payment on the check. TP has already transferred the money to a third party who meets the UCC's requirements for a holder in due course. The bank paid that third party. TP declares it is out of business. In a subsequent lawsuit:

• A) the court will find that the third party is a holder in due course and, despite the fact that TP has defrauded Choi, not require the third party to repay Choi
• B) because of the fraud involved, the court will require the third party repay Choi
• C) because the instrument involved was a cashier's check and not an ordinary check, the court will not require the third party to repay Choi
• D) because the amount in controversy was more than $50,000, the courts will be empowered to view the fraud as a felony and will ignore the requirements of the UCC
• E) none of the other choices

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Definitions:

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