Question

A representative of Gracious Living, Inc., called on the Hutchinsons and identified himself as a "demonstrator" of water-softening equipment. After explaining the cost of the equipment, he told the Hutchinsons that Gracious Living would install it for a four-month trial. In return, the Hutchinsons were to give him a list of their friends and neighbors and permit a demonstration in their house. They were to receive a bonus if sales were made to any of their friends and neighbors.
The Hutchinsons claimed that the man "asked them to sign a form that he could show to his boss to prove that he had made the demonstration and also as a bond to cover the unit while it was on the Hutchinson's property." They signed the form. Later, the Hutchinsons received a payment book from the Reading Trust Company. They then realized that they had been tricked into signing a contract and a note. Hutchinson was a high school graduate, and his wife had completed her junior year in high school. Both could read and write the English language. Reading Trust had obtained the note from Gracious Living. It had no notice of Gracious Living's business practice and was a holder in due course. The Hutchinsons refused to pay the note, and Reading Trust sued them to collect on it. Did the Hutchinsons have a real defense that they could use against the Reading Trust Company even though it was a holder in due course?



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  • CreatedJuly 16, 2014
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