Pedro and Paula de la Fuente were visited by a representative of Aluminum Industries, Inc., who…

Pedro and Paula de la Fuente were visited by a representative of Aluminum Industries, Inc., who was seeking to sell them aluminum siding for their home. They agreed to purchase the siding and signed a number of documents, including a retail installment contract and a promissory note for $9,137.24. The contract granted Aluminum Industries, Inc., a first lien on the de la Fuentes’ residence; this was in violation of the Texas Civil Code, which prohibited such provisions. The promissory note contained a notice in bold type as required by the Federal Trade Commission. It read in part: NOTICE: ANY HOLDER OF THIS CONSUMER CREDIT CONTACT IS SUBJECT TO ALL CLAIMS AND DEFENSES WHICH THE DEBTOR COULD ASSERT AGAINST THE SELLER OF GOODS OR SERVICES OBTAINED PURSUANT HERETO WITH THE PROCEEDS THEREOF. Aluminum Industries assigned the promissory note and first lien to Home Savings Association. Aluminum Industries subsequently went out of business. Home Savings brought suit against the de la Fuentes to collect the balance due on the note. Home Savings contended that it was a holder in due course and that the de la Fuentes could not assert any defense against it that they had against Aluminum Industries. Can an assignee of a consumer promissory note that includes the notice required by the FTC qualify as a holder in due course?

 

 

 

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