An instrument that states simply “I.O.U.” is not negotiable.
Multi Investments, Inc., offers to buy Nano Toy Corporation. On May 1, Nano provides
copies of its financial statements for the previous year, showing an inventory of $10
million. On May 15, Nano discovers that the previous year’s inventory is overstated by
$5 million, but does not inform Multi. On June 1, Multi, relying on the financial
statements, buys Nano. On June 10, the buyer discovers the inventory overstatement.
Can Multi succeed in a suit against Nano for fraud?