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35 Cards in this Set
- Front
- Back
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What's a note?
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Instrument where maker promises to pay payee.
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What's certificate of deposit?
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Promise by bank to pay
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What's a draft?
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Instrument where drawer orders drawee to pay payee.
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What's the technical definition of a check?
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draft which is payable on demand and drawn on bank, even without words of negotiability.
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What's an endorecment?
And what are the kinds of endorcements |
signature other than maker, drawer, or acceptor.
special, restrictive, unrestrictive, qualfied, unqualified, anomalous. |
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What's a special endorcement?
and what's the oposite? |
indentifies the person to whom payable,
Blank- doesn't identify |
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What's a restrictive endorcement?
what's the opposite? |
restrictive indorsement limits payment, Unrestrictive doesn't
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Qualified endorcement?
Opposite? |
negates secondarty liability, unqualified doesn't.
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What is an anomalous indorcement, and what is the significance?
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Anamalous endorcements are outside of the chain, which indicates accomodation (suretyship), accommodating parties are liable in the capacity they sign.
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What are the 4 fights in commercial paper?
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Holder v. Maker
Holder v. Indorser Holder v. Drawee Drawer v. Drawee |
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HDC Rule
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negotiable instrument,
negotiated to a holder in due course, takes free of personal defenses, subject only to real defenses |
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what's a negotiatable instrument?
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Writing, signed by maker, unconditional (no express conditions, not subject to another writing, but a limitation of funds okay), promise or order, to pay a fixed amount, of money, no other unauthorized promise, on demand or at a definite time, to bearer or order
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how is negotiated instrument negotiated?
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order- indorsement and delivery
bearer- just delivery (last indorsement rule) |
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what's the last indorsement rule?
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you can turn order to bearer and vice-versa- if its special indorsement its order, if blank indorsement its bearer.
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What's a holder in due course?
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1.for value (executed consideration, antecedent claim)
2. in good faith, subjective and objective 3. without knowlege or notice of overdueness, dishonor, claim, defense, forgery, irregularity, or incompleteness which questions authenticity (Plus execeptions) |
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What are exceptions to holder in due course when other elements exist?
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if you buy in
Bulk, from an estate, or from a judicial sale |
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what are real defenses?
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Forgery, fraud in factum, alteration, adjudicated insanity, infancy and illegality, duress, discharge in insolvency, statute of limitations, suretyship defenses
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statute of limitations?
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3 years after unaccepted draft (but not longer than 10 years from date of issue), 6 years for notes; unless no demand, then 10 years
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FTC ammelioration?
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HDC rule doesn't apply when:
Human buys consumer goods or services on credit (more than 4 installments) |
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what's the shelter rule?
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anyone who takes after HDC gets rights of hdc, except the participant
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what are the elements for holder to go after indorser?
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Presentment, dishonor, notice of dishonor
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what's presentment?
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holder goes to primary party and demands payment.
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what's dishonor
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primary party refuses to pay holder
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what's notice of dishonor
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holder tells secondary party
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what's warranty liability?
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other than issuer and presentor anybody else who transfers the instrument warrents that they are entitled to enforce, signatures are valid, no alteration, no defenses, no knowledge of insolvency proceedings.
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what does presentor warrent?
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just warranty of title, not that the signature is genuine
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What are elements when holder challenges drawee?
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only has claim if there was acceptance, certification. if there is certification drawee liabile for consequential damages, and drawer discharge.
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what are elements when drawer goes after drawee?
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contractual relationship. Drawee can properly pay overdrafts, the date is not relevant. (unless there is a demand to stop payment)
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when is drawee liable? and what's it called.
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When they don't pay but should have. Wrongful dishonor.
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where drawee does pay but shouldn't what are they liable?
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Yes, breach of contract. but there are exceptions
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what are exceptions to bank liability for paying when they shouldn't have?
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1. fictitious indorsements are effective (not fictious drawers because they have signatures)
2. drawer negligent in the drafting 3. drawer negligent in the notifying. (multiple forgeries have 30 days to notify). |
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what are banks recovery rights for mistaken payment?
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if bank makes mistake and pays someone they can't collect from innocent party they paid out to. Payment is final
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what are banks rights when forged indorsement?
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payment is not final and bank can recover from innocent party whom it paid. they have breached warranty of presentment (right to enforce title)
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what are banks recovery rights for mistaken payment?
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if bank makes mistake and pays someone they can't collect from innocent party they paid out to. Payment is final
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what are banks rights when forged indorsement?
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payment is not final and bank can recover from innocent party whom it paid. they have breached warranty of presentment (right to enforce title)
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