Question

Bill decided that it was time to remodel his home. Among the features that Bill had included in his remodeling plan was the addition of several very large picture windows. Because of the great expense of the windows, Bill financed the cost through the issuance of a promissory note. The manufacturer of the windows sold the promissory note to a bank. Just after the promissory note matured, the windows began to leak badly. Bill refused to pay on his promissory note and brought action against the manufacturer for breach of contract. Will the bank recover on the promissory note?

Answer 1

Given the bank's holder in due course status, the argument of breach of contract will not be effective, for it is a limited defense that is not available against a holder in due course.

What is a promissory note?

A promissory note sometimes referred to as a payable note, is a legal instrument, in which one party promises to pay a fixed amount to another, either for a fixed or future period or for a payer, subject to certain terms and conditions.

Thus, Given the bank's holder in due course status, the argument of breach of contract will not be effective, for it is a limited defense that is not available against a holder in due course.

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