Answered: Can Gustavo now raised the issue that…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Felipe borrowed $1000 from Gustavo in 1998 when the Phil P - US$ exchange rate was P56 - US$1. On March 1, 2018, Felipe tendered to Gustavo a cashier's check in the amount of P4,135 in payment of his US$ 1000 debt, based on the Phil P - US$ exchange rate at that time. Gustavo accepted the check, but forgot to deposit it until Sept. 12, 2008. His bank refused to accept the check because it had become stale. Gustavo now wants Felipe to pay him in cash the amount of P5,600. Claiming that the previous payment was not in legal tender, and that there has been extraordinary deflation since 2008, and therefore, Felipe should pay him the value of the debt at the time it was incurred. Felipe refused to pay him again, claiming that Gustavo is estopped from raising the issue of legal tender, having accepted the check in March, and that it was Gustavo's negligence in not depositing the check immediately that caused the check to become stale. Can Gustavo now raised the issue that the cashier's check is not legal tender?

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