Blpr - Neg Insts And Dot, Brupcy, Surety

Front 1

If the same person forges your signature a second time, how long do you have to notify the bank?

Back 1

You have 30 days after 1st forgery to protect against the 2nd forgery

Front 2

Two cases where forgery will transfer good title?

Back 2

1. Fraud by impersonation
- in phony payee situation, GFpurchaser is protected, no intent that named payee has right to paper
2. Dishonest employee - bookeeper forges payroll checks

Front 3

Before you can sue the guarantor or collection, what do you have to do?

Back 3

You must exhaust all remedies against principal debtors

Front 4

Who are real defenses against?

Back 4

everbody

Front 5

Who are personal defenses good against?

Back 5

everybody (original parties) except HIDC

Front 6

What is subrogation?

Back 6

the right of surety to step into creditors shoes
- go after collatoral held by creditor
- once surety pays debt in full, can go after collatoral of debtor

Front 7

What is assuming a mortgage?

Back 7

-personally liable on mortgage debt
-original mortgator remains personally liable
-original mortgagor can be released by bank (novation)
-orig. mortgagor liable if new mort. defaults

Front 8

What is taking subject to a mortgage?

Back 8

-no personal liability on debt
-all you stand to lose is the land

Front 9

What are the four remedies a surety has when a debtor defaults?

Back 9

(ICES)
1. Indemnity - reimbursement, go after principal debtor for amt paid by surety to creditor
2. Contribution - more than 1 surety, seek recovery from other co-sureties when one has paid more
3. Exoneration - before anything takes place, surety wants out, most courts will not release
4. Subrogation - collateral. Upon paying debt in full, surety's right to seek recovery from collateral

Front 10

What rights do a HUHIDC have?

Back 10

Same rights as a HIDC - steps into their shoes.
- takes from HIDC but knows something is wrong, but doesnt meet test of HIDC (does not pay value)

Front 11

What are the real defenses?

Back 11

(IFMIF) or (FIMFI)-HIDC loses
Infancy, Insanity, Illegality, Insolvency
Forgery - no one can collect, HIDC gets no rights
Fraud in the Execution
Fraud in the inducement
Material alteration

Front 12

What is a certified check?

Back 12

Check agreed to by banks in writing "good as cash"
- certified at request of holder
- prior parties (prior to certification) released from liability

Front 13

What is an acceleration clause?

Back 13

Holder speeds up due date - perfectly acceptable, does not affect negotiablity

Front 14

What are the elements of negotiation?

Back 14

SUM BOD
-Signed by maker or drawer
-Unconditional promise to pay
-Payable only in money
-Payable to bearer in good faith
-Payable to order, unless a check

Front 15

What does "Pay to the Order of Kelly mean?"

Back 15

Payable to Kelly or anyone she endorses "pay to"

Front 16

Who is bearer paper payable to?

Back 16

Anyone in possession
- does not require endorsement
- acting in good faith

Front 17

Is pay to the "order of cash" considered bearer paper?

Back 17

Yes

Front 18

Does a check have to be payable to order or bearer?

Back 18

no - impractical - checks already have "pay to the order of"

Front 19

"Pay to ABC Co. or to XYZ"
Is this negotiable?

Back 19

NO
-not payable to order or bearer

Front 20

Who needs to sign a negotiable instrument?

Back 20

-maker if a note

-drawer if draft

-agent can sign as long it is indicate that he is "acting for"

Front 21

Can a negotiable instrument be postdated or antedated?

Back 21

Yes

Front 22

Can a negotiable instrument "arise out of the sale of goods"

Back 22

Yes

Front 23

Can a negotiable instrument be secured by collateral?

Back 23

Yes

Front 24

How do the words "subject to" affect an instrument?

Back 24

makes it non-negotiable

Front 25

How many parties in a Promissory note?

Back 25

2 - maker (promises to pay) and the payee (promise is made to)

Front 26

How many parties in a draft and what are they?

Back 26

3
Drawer - orders the 3rd person to pay
Drawee - ordered to pay
Payee - receives the money (endorser)

Front 27

What is a check?

Back 27

A draft, drawn on a bank, payable on demand

Front 28

Can you pay a negotiable instrument with savings bonds?

Back 28

No - must be payable in money

Front 29

Are documents of title commercial paper?

Back 29

no but they follow the same rules

Front 30

Unless it is a check, what does a negotiable instrument have to be payable to?

Back 30

Order or Bearer

Front 31

Which type of instrument has special paper, special person, special rights?

Back 31

Negotiable
Special paper - negotiable instrument
Special person - HIDC
Special rights for HIDC - collect face amt

Front 32

Can negotiable instruments be payable six months after a persons death?

Back 32

NO - must be definite time

Front 33

What type of endorsement is one that says "for collection only"

Back 33

restrictive

Front 34

What is a special endorsement?

Back 34

specifies the person to whose order the instrument is now payable. a special endorsement on bearer paper converts it to order paper.

Front 35

Under a nonnegotiable bill of lading, a carrier who accepts goods for shipment, must deliver the goods to whom?

Back 35

the consignee of the bill of lading

Front 36

Is a bill of lading negotiable if the goods are to be delivered to order or bearer?

Back 36

Yes

Front 37

"without recourse" usually indicates what type of endorsement, and what does it do

Back 37

qualified - disclaims the endorser's secondary liability for payment on the instrument

Front 38

In order for a transferee of a negotiable instrument to qualify as a holder, what requirements must be met if its order paper?

Back 38

possession AND endorsement of transferor

Front 39

In order for a person to qualify as a HIDC of a promissory note what 3 conditions must be met?

Back 39

1. must qualify as holder
2. note must be negotiable
3. must take the note for Value, in Good Faith, and without notice that it is overdue, dishonored or defense against it

Front 40

What does it mean if a negotiable document of title is "duly negotiated"?

Back 40

It is negotiated to a holder who takes the document for value, in good faith, and without notice of any defense or claim to it.

Front 41

What does a homestead exemption protect?

Back 41

Homestead exemption legislation protects a debtor's property from seizure by unsecured creditors, but not a valid IRS lien. A secured creditor with a valid home mortgage lien could seize the property.

Front 42

What is a writ of garnishment?

Back 42

A writ of garnishment is served upon a debtor's employer, which results in part of the debtor's wages being paid to the creditor.

Front 43

What is a mechanic's lien?

Back 43

A mechanic's lien is a device that enables someone who has rendered services to real property to place a lien against the real property to secure payment for labor, materials or services provided.

Front 44

Under the fair debt collection practices act, what would a collection service using improper debt collection practices be subject to?

Back 44

civil lawsuit for damages for violating the act

Front 45

What is a composition agreement?

Back 45

a modification of the original credit agreement/contract whereby the creditors agree to accept an immediate payment of a lesser amount in satisfaction of the debt. If the debtor makes the payments due, then the debtor will be released from the debt.

Front 46

What is an Assignment for the Benefit of Creditors?

Back 46

a voluntary transfer of the debtor's nonexempt assets to an assignee who liquidates the assets and distributes the proceeds to the creditors. All of the debtor's general creditors participate; however, the debtor is not released from its debts if these are not satisfied as a result of the distribution.

Front 47

What is attachment?

Back 47

prejudgment, court-ordered seizure of property (including personal property) that is in controversy because of a debt. available to a creditor where the debtor owns no real property.

Front 48

Does a surety have the right to compel
the creditor to collect from the principal debtor?

Back 48

No - he has primary liability to the creditor

Front 49

Does a surety have the right to compel the creditor to proceed against the principal debtor's collatoral?

Back 49

No

Front 50

How does the release of a cosurety affect the other cosureties?

Back 50

Unless a creditor specifically preserves his/her/its rights, a release of a cosurety releases the other cosureties in the amount of the released surety's share.

Front 51

Do State exemption statutes prevent all of a debtor's personal property from being sold to pay a federal tax lien?

Back 51

No, since property exempt by statute may be retained by the debtor. They may protect some of a debtor's property from being sold.

Front 52

Are Federal social security benefits received by a debtor exempt from garnishment by creditors?

Back 52

Yes

Front 53

When a principal debtor defaults and a surety pays the creditor the entire obligation, which remedy gives the surety the best method of collecting from the debtor?

Back 53

Subrogation - When a principal debtor defaults and the surety pays the entire obligation, the surety inherits from the creditor all of the creditor's rights against the debtor.

Front 54

What is an Order of Receivership?

Back 54

allows a receiver appointed by the court to take possession but not title to the debtor's property.

Front 55

What is a writ of execution?

Back 55

allows the debtor's property to be seized and sold to satisfy a judgment.

Front 56

What is a writ of attachment?

Back 56

allows the debtor's property to be seized to secure payment of a judgment