Lets say that I buy a computer from Chump's electronics. It is advertised with 60 gig HDD. I write a check to Chump's for the computer. Unknown to me, Chump's has changed out the HDD with a 40 gig HDD which makes the computer useless to me. Also during this time, Chump's signs over my check to its distributor, Monitors Unlimited for money that Chump's owes them. I find out that Chump's has ripped me off and attempt to cancel the check. However, Monitor's Unlimited has tried to cash the check and is demanding payment. My question - am I liable to Monitor's Unlimited for the amount of the check? If so, why? If not, why not?
In this instance I would call my State Attorney General for advice and guidance. I am assuming all of this purchase was not done via the internet or across state lines.
I think this is another one of Mr. Engineer's assignments. I also think Mr. Engineer should do the work himself like everyone else. But what do I know. Tony
In general, a check is a "draft" or "order to pay" and a "negotiable instrument" under the Uniform Commercial Code. If Monitors Unlimited accepted your check from Chump, for value and without notice of the problems you're having with Chump, in other words, in "good faith", Monitors becomes what is known as a "holder in due course" and entitled to enforce your promise to pay, in other words, your check, regardless of your fight with Chump. Now, this answer is probably correct IF you are a business and not a consumer. Some states muddy the waters with consumer protection legislation that allow consumers to exert defenses to loan or sales contracts. Your recourse is most likely against Chump and not Monitors. But as always in the law, IT DEPENDS.
Out of 500 or so questions I have answered for various assignments over the past 6 months, I have been stumped on only 2-3. On this particular question, I found you could answer it in any number of ways depending on your perspective. However, the law is pretty cut and dry so I thought I would pose the question to some of the experts on this board. Thanks for your kind words.
Thanks Nosbourne I figured as much based on the chaper on banking. However, my answer (which was simular to yours) conflicted with the chapter on property law.
Property law? As in real estate? If so, real estate is a different animal; do not confuse them! Please explain your conflict.
