Umar applied to a company to buy some shares in April and paid a deposit. He didn't hear anything from company until November when company sent him a letter of allotment as acceptance and a request for the balance. By this time, Umar had changed his mind and no longer wanted the shares. Question a. Is Umar bound to buy the shares? Why or why not?

Umar applied to a company to buy some shares in April and paid a deposit. He didn't hear anything from company until November when company sent him a letter of allotment as acceptance and a request for the balance. By this time, Umar had changed his mind and no longer wanted the shares. Question a. Is Umar bound to buy the shares? Why or why not?

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Adams, by fraudulent representations, induced Barton to purchase one hundred shares of the capital stock of the Evermore Oil Company. The shares were worthless. Barton executed and delivered to Adams a negotiable promissory note for $5,000, dated May 5, in full payment for the shares, due six months after date. On May 20, Adams indorsed and sold the note to Cooper for $4,800. On October 21, Barton, having learned that Cooper now held the note, notified Cooper of the fraud and stated he would not pay the note. On December 1, Cooper negotiated the note to Davis who, while not a party, had full knowledge of the fraud perpetrated on Barton. Upon refusal of Barton to pay the note, Davis sues Barton for $5,000. Is Davis a holder in due course or, if not, does he have the rights of a holder in due course? Explain.
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