Business Law II
Words: 825
Pages: 3
76
76
DownloadBusiness Law II
Student’s Name
University Affiliation
Business Law II
Is the check a bearer instrument or an order instrument?
A bearer instrument is one that gives the person holding it (holder) the power and rights of owning the document as well as any title herewith. Properties here include bonds, or shares and in some cases property (August, 2009). There is no written record of who is the real or original owner of the property or one with powers to transfer the power of ownership. Business laws assume that whoever holds the bearer document is the rightful owner of the property in question. An order instrument, on the other hand, is an instrument that has the specific details of the payee and to anyone that the payee specifies or designates to pay (Cranston, 2009).
In this case, the check is a bearer instrument since the person who holds who happens to be Mr. Glenn has the power and rights in owning it and treats it in the way that he pleases. He now has the power to pay the debt he owes to his creditor, Carol. There is no proof to confirm the owner of the check as there is no reason for doubt in the beginning.
Did Glenn’s delivery of the check to Carol constitute a valid negotiation? Why or why not?
Glenn’s delivery of the check to Carol constituted a valid negotiation.
This is because laws on the business state that any form of negotiation necessitates the payee endorsing the instrument to any new holder with a signature. Carol did endorse the check on the back hence it becomes binding (August, 2009).
Wait! Business Law II paper is just an example!
This kind of endorsement acts as the right compliance for negotiation. The instructions at the back of the check endorse the instrument finally. A valid negotiation through written annotations at the back of the instruments binds the power with the bearer. There is no further form or way of endorsement needed on the instrument as it confirms the bearer.
What type of instrument did Carol make after endorsing the check?
Carol endorsed the check and, therefore, authorized the bank with which she cashes her money with to collect the money specified in the check to take the payment on her behalf. The bank then gets the authorization to act on behalf of Carol and negotiates the check on her behalf (Cranston, 2009). Carol was fast in endorsing the check handed to her. It was the wisest decision as well as the safest way to avoid a snarl up in the amounts paid in case another person would come claiming the check as their own. Carol also made the right move by writing at the back of the check the words ‘for deposit only’ and signed it and that gave her the power of ownership of the check paid to her (August, 2009).
Is Carol or Glenn a bona fide purchaser in this case? What legal significance does this would have?
A bona fide purchaser is an innocent party to a trade who makes a purchase of an item or property with any knowledge or notice of the seller’s or the other party’s title claim, relevance, and relationship to that property in question (Cranston, 2009). They pay for the property in question and irrespective of claims by another party on the rightful ownership, they automatically become the titleholders. It is hence important for one to make their interest known to other parties as it acts a form of protection for the owner to lose the interest.
The legal significance of this is that any equitable interests unbind the bona fide purchaser and they hence do not have real or conceded form of notice as long as they have the defense in inspecting that they have done what they should have done at the beginning (Cranston, 2009). The beneficial owner has the right to lay claims against one who deemed the real and original owner of the property in question. The law in business, however, has codes on the bona fide purchaser rule and with it have codes to it (August, 2009).
If Maggie sues Carol and Glenn, does Maggie have the right to recover the $1,000.00 from Carol and/or from Glenn? Explain all theories on which Maggie could recover from Carol and/or Glenn as well as Carol and/or Glenn’s potential defenses against Maggie.
If Maggie sues Carol for cashing in the amount handed to her by Glenn, then she would lose the case against her. This is because Carol had no knowledge of whether that the check presented to her by her debtor belonged to him or not and is the bona fide purchaser here and, therefore, innocent. Maggie has no case against Glenn in the eyes of law since it was her act of ignorance and ‘carelessness’, that she dropped the check she intended to pay her creditors. When she first wrote the check, she had the option of writing all details in regards to the payee that would render it useless to Glenn when he found it lying on the floor.
Maggie could only recover the money on the check if she approached the bank directly and ordered them to stop any payment to Carol. Morally she could talk to Carol and Glenn and solve the way forward to have the check returned to her but it can no longer work for the original intended purpose but destroyed.
References
August, R., Mayer, D., & Bixby, M. (2009). International Business Law: text, cases and readings. Pearson education.
Cranston, R. (2009). Regulating business: Law and consumer agencies. London: Macmillan.
Subscribe and get the full version of the document name
Use our writing tools and essay examples to get your paper started AND finished.