Cengage Advantage Books: Law for Business 18th Edition by John Ashcroft ,Janet Ashcroft

Exercise 20

Ellen and Roscoe Reagans bought a motor home from Paul Sherry Vans and R.V.'s Inc. (Sherry), but it had a defect. The Reaganses sued Sherry, the manufacturer, MountainHigh Coachworks Inc. and Firstar Bank, N.A., now U.S. Bank National Association, the creditor that loaned them the money to buy the motor home. They alleged that the bank was derivatively liable for their claims against Sherry based on an FTC-mandated notice in their loan disclosure, note, and security agreement with the bank: "ANY HOLDER OF THIS CONSUMER CREDIT CONTRACT IS SUBJECT TO ALL CLAIMS AND DEFENSES WHICH THE DEBTOR COULD ASSERT AGAINST THE SELLER OF GOODS OR SERVICES OBTAINED WITH THE PROCEEDS HEREOF." Was the bank liable for the full amount of the Reaganses' claims against Sherry?