Subject: Business Law
Oliver gave Morton his 90- day negotiable promissory note for $10,000 as a partial payment for the purchase of Morton's business. Morton had submitted materially false audited financial statements to Oliver in the course of establishing the purchase price of the business. Morton also made various false statments about the business' value. For example, he materially misstated the size of the backlog of orders. Morton promptly negotiated the note to Harrison who purchased it in good faith for $9,500 giving Morton $5,000 cash, a check for $3,500 payable to him, which he endorsed in blank and oral promise to pay the balance within 5 days. Before making the final payment to Morton, Harrison learned of the fraudulent circumstances under which the negotiable promissory note for $10,000 has been obtained. Morton has disappeared and the balance due was never paid. Oliver refuses to pay the note.
Answer the following, setting forth reasons for any conclusions stated.
1. In the subsequent suit brought by Harrison against Oliver, who will prevail?
2. Explain why or why not Harrison will or will not prevail. Discuss all relevant issues
Answer 1 : If a subsequent suit is brought by Harrison against Oliver. Oliver will Previal.
Answer 2 : Explanation :
Contract can be voidable if it contains omitting or falsifying facts or information, or the intention to not carry out the promise in the contract. In this case There is a element of Fraud undertaken by Morton when he gace false audited financial statements to Oliver. Hence Oliver has a right to avoid the contract.
Subject: Business Law Oliver gave Morton his 90- day negotiable promissory note for $10,000 as a...
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