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| negotiable instruments |
hotpotato |
03/05/07 |
Hi I was wondering if you can provide me with some assistance on these law problems?
1. Every year for a decade, Chamique gave an expensive birthday gift to her friend Ahmad. Last year, she gave him a diamond ring; the year before, a stereo. This year, however, she found that she was too busy with work to actually spend time shopping for a present, so she drafted a cheque for $5000 and gave it to Ahmad. Ahmad accepted it, but later told Chamique that he was hurt that she did not make more of an effort. Chamique became very upset herself and placed a stop payment order on the cheque before Ahmad cashed it. Since the bank will not honour the cheque, Ahmad wants to sue Chamique on the instrument. Is he enti¬tled to do so? Give the best reason for your answer.
2. Gilles, who is 16 years old but looks much older, bought a snowboard from Eva's Sporting Goods. He paid the $750 price with a promissory note that was payable in three monthly instalments of $250 each. Eva stamped the words "consumer purchase" on the note at the time of the sale. Unfortunately, the board was stolen the first time that Gilles took it to the mountains. He believes that he should no longer be required to pay for something that he no longer enjoys. Not surprisingly, Eva has a different opinion. She believes that Gilles got what he wanted and that he is liable to pay the full price. Is Gilles liable on the note? Explain your answer.
3. Bibi, a lawyer, provided legal advice to Bjorn on a small matter. When he asked her for her fee, she said, "Oh, just pay whatever you think is appropri¬ate." Although the evidence indicates that the rea¬sonable value of Bibi's work was $2500, Bjorn gave her a cheque on February 14 for $15 000. Bibi slipped it into her desk without even looking at the amount. The cheque sat there until December, when Bibi presented it to the drawee bank for payment. The bank refused to honour it, however, because Bjorn's account was overdrawn. Bibi then tele¬phoned Bjorn personally and asked him for payment of $15 000. He refused, claiming that he was tem¬porarily insane when he drafted the cheque: "You should have known that I was on the verge of a com¬plete mental collapse and that I was madly—if irra¬tionally—in love with you. Why else would I give you a cheque for that much money on Valentine's Day? You certainly didn't earn $15 000." And indeed, the evidence indicates that Bjorn was quite obviously insane when he drafted the cheque. Bibi wanted nothing more to do with Bjorn, but she did want the money. Therefore she sold the cheque to Bergman Collection Agency, which was unaware of Bjorn's argument when it purchased the instrument from Bibi. Bergman has since learned of Bjorn's argument, but claims that it is entitied to payment as a holder in due course. Is that correct? Explain your answer.
4. Roger, who was in the market for a computer, Hussein's Electronics with a view to finding a bargain. He was directed to a computer that had been used as a floor model in the store. Although the sales representative was unwilling to provide a warranty, he did assure Roger that the unit could be returned if it did not perform satisfactorily during the first month. He also assured Roger that the price could be dropped by $500 if the computer developed problems. Roger agreed on that basis to purchase the computer for either $2000 or $1500, depending upon how well the machine performed. By way of payment, he provided a cheque, which he modified to suit the circumstances. First, he stated the amount of the cheque to be either "$1500 or $ 2000. Second, although he entered the date of purchase on the cheque, Roger added a notation saying six months after date." And third, he added a notation to the cheque that said, "payment conditional upon quality of computer." Roger has now used the computer for five weeks without any problems Will Hussein's Electronics, as the payee of his cheque, be able to obtain payment from the drawee bank? Explain your answer.
5. On May 1, Alexa drew a bill of exchange for 25 000 on her line of credit at the People's Trust Company. The bill was payable to Svend on October 26. On June 1, Svend took the bill to the trust company. Audrey, a clerk, ensured that Alexa's credit was in good standing and wrote the following on the bill: "Accepted, October 26, Alexa Ulianov [Signature]. At that point, which party was primarily liable for paying the bill on October 15?
6. Sam Jasper agreed to sell 4000 L of animal feed to Kate Hughes, who operates a wildlife park. After receiving the product, but before inspecting it. Kate told Sam that he could collect a cheque, as payment from on top of the desk in her office. Before Sam did so, however, Kate inspected the feed and realized that it was contrary to the terms of the sale contract. Consequently, although she had completely written out a cheque in Sam's favour, she did not leave it on top of her desk as promised. She instead put it into her desk drawer, with the intention of calling him and explaining her concerns. Before she could do so, however, Sam came by her office while she was out. when he realized that there was no cheque on top of her desk, he looked through the drawers, where he found the cheque that Kate had drawn. Sam imme¬diately added his general endorsement to the back of that cheque and gave it to Benjamin Gigger as pay¬ment for another, unrelated contract. Kate soon dis¬covered the facts and ordered the Bank of Alberta (the drawee) to refuse payment. Because Benjamin could not cash the cheque at the bank, he has sued both Sam and Kate for payment. Will he be success¬ful against either party? What if the cheque that Sam took from the drawer was incomplete because Kate had not filled in the amount (although she had otherwise added all of the necessary details, includ¬ing her signature)? Explain your answer.
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