Sam writes a check in the amount of $75.00 to Ed. Upon receiving the check, Ed...

 

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Sam writes a check in the amount of $75.00 to Ed. Upon receiving the check, Ed alters the check so that it is for $750.00. Ed then negotiates the check to Bruce, who in turn negotiates the check to Paul, who takes the check to the West Federal Bank, the drawee bank, to have it cashed. Upon receiving the check back, Sam advises West Federal Bank that the check has been altered. It is determined that there is no negligence on behalf of Sam in the drafting the check, which permitted the alteration. West Federal Bank obtains recovery from Paul for the entire $750.00 which has been paid, and Paul seeks recovery against Bruce. Ed cannot be found, so Bruce seeks recovery on the check against Sam. Can Bruce recover any or all of the money from Sam? a. No, since there is no contractual relationship between Bruce and Sam, there is no liability from Sam to Bruce on the negotiable instructment. b. No, even though Bruce took the check in good faith and for value, he cannot be a holder in due course because the check is altered and he has no right to receive it in that manner. c. Bruce can recover the entire $750.00 because as the drawer of the original instrument, Sam has primary liability and can always be carried upon to carry out the terms indicated on the paper. d. Bruce can recover from Sam only $75.00, the original amount of the check, because even though Bruce is a holder in due course, alteration is a universal defense, and Sam can only be held liable upon the original amount of the check. Sam writes a check in the amount of $75.00 to Ed. Upon receiving the check, Ed alters the check so that it is for $750.00. Ed then negotiates the check to Bruce, who in turn negotiates the check to Paul, who takes the check to the West Federal Bank, the drawee bank, to have it cashed. Upon receiving the check back, Sam advises West Federal Bank that the check has been altered. It is determined that there is no negligence on behalf of Sam in the drafting the check, which permitted the alteration. West Federal Bank obtains recovery from Paul for the entire $750.00 which has been paid, and Paul seeks recovery against Bruce. Ed cannot be found, so Bruce seeks recovery on the check against Sam. Can Bruce recover any or all of the money from Sam? a. No, since there is no contractual relationship between Bruce and Sam, there is no liability from Sam to Bruce on the negotiable instructment. b. No, even though Bruce took the check in good faith and for value, he cannot be a holder in due course because the check is altered and he has no right to receive it in that manner. c. Bruce can recover the entire $750.00 because as the drawer of the original instrument, Sam has primary liability and can always be carried upon to carry out the terms indicated on the paper. d. Bruce can recover from Sam only $75.00, the original amount of the check, because even though Bruce is a holder in due course, alteration is a universal defense, and Sam can only be held liable upon the original amount of the check.

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Answer d Bruce can recover from Sam only 7500 the original amount of the check because even though B... View the full answer