Ariel issued a note to Brando. There was a total failure of consideration. Brando issued the note for consideration to Cecil who is a holder in due course. Cecil indorsed the note to David who knew of the failure of consideration. Can David successfully collect from Ariel?
A. No, because David knew the failure of consideration.
B. No, although David acquired the rights of Cecil, a holder in due course and he was not a party to any illegality.
C. Yes, because David acquired the note for consideration.
D. No, becuase David is not a holder in due course.
Answer:C
Ariel issued a note to Brando. There was a total failure of consideration. Brando issued the note for consideration to Cecil who is a holder in due course. Cecil indorsed the note to David who knew of the failure of consideration. Can David successfully collect from Ariel?
A. No, because David knew the failure of consideration. B. No, although David acquired the rights of Cecil, a holder in due course and he was not a party to any illegality. C. Yes, because David acquired the note for consideration. D. No, becuase David is not a holder in due course.