Assuming That Henry Admits the Modification but It Is Not

question 60

Multiple Choice

Assuming that Henry admits the modification but it is not considered fraudulent,which of the following is true regarding Taylor's liability on the note?

• A) Because of the alteration, Taylor is not liable for any amounts under the promissory note.
• B) Taylor's obligation will be enforced only to the amount of $3,000 if payment is to be made to Henry; but in the event the note is negotiated to another holder, Taylor is liable for $3,500.
• C) Taylor's obligation will be enforced only to the amount of $3,000 if payment is to be made to Henry; but in the event the note is negotiated to a holder in due course, Taylor is liable for $3,500.
• D) Unless Taylor has a written document from Henry to the effect that the agreement was for $3,000 only, Taylor and Henry will be legally required to split the remainder with Taylor being held responsible for $3,250.
• E) Taylor is liable for $3,000 regardless of whether or not Henry has negotiated the note to another party.

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Definitions:

Profit-Maximizing Price

The price level at which a company can make the most profit while selling its goods or services.

Nondiscriminating Monopolist

A monopolist who charges all consumers the same price for its product, as opposed to practicing price discrimination.

Marginal Revenue

The extra revenue generated by the sale of an additional unit of a product or service.

Network Effects

The phenomenon where increased numbers of users or participants improve the value of a good or service.