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CH 27 1 Defenses & Limitations(1)

CH 27 1 Defenses & Limitations(1)

Q Let say you bought a High Definition Flat Screen TV set from PC Richards on credit and sign a promissory note which qualifies as a negotiable instrument. PC Richards then sells the note for value to a subsequent holder in good faith so that the subsequent holder qualifies as a HDC. If the TV set turns out to be no good (breach of contract by the payee), can the HDC still collect from you on the note? Why or why not?

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I think that if the TV set turns out to be no good (breach of contract by the payee), the HDC can still collect from me on the note. This is because when the subsequent holder qualifies as an HDC, it can be possible for the holder to do the collection. Moreover, there has been consideration shown by the subsequent holder against the note and this aspect qualifies the holder to be an HDC. Therefore, breach of law cannot be pleaded by me in this situation while trying to make a defense against the note.