TP Sells Franchises in the Old Fast Food Chain

question 415

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 liable as surety
• 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:

Hypothetical Organization

An imaginary or proposed structure for an organization used for analysis or illustration.

Real-world Industry

Sectors and activities in the economy that produce goods and provide services in natural, tangible, practical, and applied contexts outside of theoretical or simulated environments.

Leader Development

The process of expanding an individual's capacity to perform in leadership roles within organizations.

Developmental Readiness

The state or condition of being prepared to undertake personal or professional growth initiatives or learning activities.