DIY is a large home improvement chain with stores in the southeastern United States. It sells lumber, hardware, paint and other products typical of such a business. A majority of its sales are to local contractors who typically purchase items using a net thirty payment plan.

Letters a. and b. provide alternative means of payment by DIY's buyers and means of transfer of those rights to payment by DIY. Generally, DIY sells these rights to payment because it needs cash.

a. DIY factors (assigns) its accounts receivable to 1^st Trust Bank of Athens, Georgia. 1^st Trust is invariably a good faith purchaser for value of these accounts receivable.

• What are 1^st Trust's rights to payment on these accounts (as compared to DIY's rights to payment)?
• What if some purchasers are unwilling or unable to pay?

b. DIY requires its credit buyers to sign 30 day negotiable instruments promising to pay within that time. DIY properly negotiates these instruments to 1^st Trust, who purchases this paper for value, in good faith and without notice of any defenses or claims.

• What are 1^st Trust's rights to payment on these negotiable instruments (as compared to DIY's rights to payment)?
• What if some purchasers are unwilling or unable to pay?

Answer rating: 100% (QA)

a When DIY factors assigns its accounts receivable to 1st Trust Bank of Athens Georgia 1st Trust ess... View the full answer