Bill and Ted have put aside their differences

Bill and Ted have put aside their differences and decided to open their own bicycle business. Their first customer Horatio, a college student comes in looking to purchase an expensive mountain bicycle that costs $1200.00. Horatio has a nice 10 speed bicycle, but its only worth $600. Horatio doesn’t have a job, so Bill and Ted agree to sell Horatio the mountain bicycle provided that he:

1. Immediately sign an agreement to pay the entire purchase price;

2. Have his father guarantee the promise

3. Sign an agreement to leave his 10 speed as security on the note agreement;

4. Leave his 10 speed as security for the note.

Horatio gives Bill and Ted a sheet of paper statingonlythe following:

“IOU $1200 provided that the bicycle is in good shape. My daddy will pay you if I don’t”

Horatio also gives Bill and Ted the bicycle. Eager to capitalize their business for more bicycles, Bill and Ted sell give the bicycle to Horatio and sell the document mentioned above to Ted’s mother for $1150. They also lease Horatio’s bicycle out to Alexandra for $20/week. Alexandra takes the bicycle with her. Horatio also signs an agreement with his student loan company to give the old 10 speed and the new mountain bicycle as security on a loan to buy pizza. Neither Horatio nor his father ever makes any payment to Bill, Ted ,or Ted’s mother. Ted’s mother wants to collect the cash. When she asks Horatio about the money, he states that the bicycle is broken and he’s not going to pay anything. He also demands the return of his 10 speed.

Please prepare an analysis of whether the IOU is commercial paper stating all the reasons for your determination? What rights, if any, Ted’s mother has to Horatio’s ten speed bicycle and to the mountain bicycle? What remedies Ted’s mother has against Horatio and any defenses Horatio may have to Ted’s mother’s action? What remedies Ted’s mother has against Horatio’s father and any defense Horatio’s father has to this action?