1. You are the owner of an automobile tire wholesaler. You agree to sell a conta

Question

1. You are the owner of an automobile tire wholesaler. You agree to sell a container of tires for $10,000 to Regional Auto Repair, Inc. John, a new employee of Regional Auto Repair, offers to pay you with a promissory note worth $40,000 from a business you have not heard of. John claims that he does not have time to enforce the note but assures you that it will be very easy for you to do so. John also inquires whether you would have further transactions by which he could pay you with similar promissory notes. Evaluate whether or not you should accept the promissory note as payment for the tires, particularly in reference to being a holder in due course.

Explanation / Answer

In this case I should not accept the promissory note as payment for the tires because the the promissory note is from a business that I am not sure of and hence accepting the same will involve risk for the business and may also incur a loss as well. It may happen that the note may actually be authentic but it would be better not to take the risk as it may affect the business negatively if it does not work out for good.

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