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54 Cards in this Set
- Front
- Back
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What is liability of drawer when bank certities check
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NONE discharged but bank primary liability
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Can a bank charge its drawer even though no funds?
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yes as long as draft was propery payable
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Can drawee bank recover money it paid to payee who presented check and received paymen?
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NO rule of finality unless payee breached warranty of presentment
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What are warranties of presentment?
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1) good title 2) signature is genuine 3) instrument not materially altered 4) no defense good against him 5) no knowledge of bk of maker
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When Holder wants to recover against the maker what anaylsis do you go through?>
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1. NI?
2. Negotiated? 3. HDC? |
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Requirments for NI
8 of them |
1. writing
2. signed by maker or drawer 3. unconditional 4. promise or order 5. to pay fixed amt of money with or without interest 6. with no unauthoirzed promises 7. payable either on demand or at a definite time 8. to bearer or order |
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Result if not NI?
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Contract
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What to look at to determine negotiability
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Last endorsement
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What result if holder crosses out an endorsers name?
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then discharges that endorser's secondary liability
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2 types of negotiation possibilities
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1. ORDER ( to specific person)
2. BEARER (blank endorsement or to cash or signed) For order must have endorsement and delivery BEARER=just delivery can be involuntary |
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3 requirments for HDC
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1) gave value
2) took in good faith 3. no notice of claims or defenses |
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describe good faith for HDC
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1. subjective
2. Objective observance of reasonable commercial standards of fair dealing test |
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For NI what kind of currency is ok?
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ANY TYPE even foreign
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Does saying where funds for NI come from making it conditional
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NO it is ok
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What would make a instrument conditional?
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have to look to another writing to figure out but reference to security collateral is ok!!
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If words and numbers are inconsistENT WHAT result?
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Words control under k interpretation law
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What are the only promises allowed that would not impair NI (2)
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1) attorney fees if default
2) referecne to maintain collateral |
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What is result if no date on when payable
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PAYABLE ON DEMAND
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Are accelleration clauses impairment on NI
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NO ok because if dont have then every time default have to sue so could be attorney malpractice to not include one on note
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Does value for HDC work on antecedent debts?>
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YES but not on executory unperformed services
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If take as gift can you be a HDC?
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no unless shelter rule and person before was HDC
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When governs notice for HDC
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time of payment
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Can DB be HDC?
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Yes if they give value and pay out on check
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Is it possible to be partial HDC?
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Yes if pay for 1/2 of the note andthen before pay other half find out about defense
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When is check presumed overdue
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when over 90 days then have notice
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Always Non-HDC's no matter what unless shelter rule 3 of them
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b1. buyers from bulk
2. buers from estate sale 3. buyer from judicial sale |
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REAL DEFENSES (FAIDS)
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F=Forgery and fraud in factum
A=lteration, adjudicated insantiy I=infancy and illegality D=uress, discharge in bk S=urety defenses, S of L |
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S of L as real defenses (MYLEGS)
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M=arriage
Y=1 yr L= E=xecutor G= S=urety ship (main purpose |
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Explain special FTC rule where financer never HDC and is just holder
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1. Human (not corporation)
2. Consumer goods (used for family purposes, not business) 3. Or consumer services (health club and dance lesson k) 4. On credit (if 5 or more installments rule applies, but if 4 or less n/a) |
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Explain shelter doctrine
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Anyone who takes after HDC gets same rights as that HDC even if donee or knowledge UNLESS PARTICIPANT IN FRAUD
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When does holder go after endorser?
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When holder presents, it is dishonored, and notice of dishonorment given to endorser then endorser has secondary liability unless signed without recourse
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What requirment must be present for trasnfer warranty
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Transferor trasnfered for consideration
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what warranites come with transfer warranty
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1. right to enforce
2. signatures are genuine and no forgery 3. no alterations 4. no defenses 5. no knowledge of insolvency |
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What comes with presentment warranties?
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that right to enforce but no warranty that signatures are genuine and no forgeries
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When is drawee liable to holder?
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When certifies or accepts
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When does drawer bring suit against drawee?
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When drawee bank should not have paid out because check forged but they did anyway, thus they are liable unless they fall under exceptions
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Exceptions where drawee paid out on bad check and not liable to drawer?
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1) fititious payee/imposter
2. drawer negilgient in drawing 3. drawer negligent in notifying bank |
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When drawee bank has right to pay and is not liable?
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1. post-dated
2. drawer dead 3. overdraft just charge account |
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when can bank not pay no matter what?
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If drawer puts a stop payment on a check
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Even if drawer is negligent what can drawer prove to make drawee split the loss
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That bank was neglgient too
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Explain fititious payee
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Payee claims to be someone else and drawer is negligent in believing
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Explain negligence of drawer in allowing payroll padding?
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Make up names of fake employees and crook endorses to himself and cashes
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examples of drawer negligence
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1. leaving out automatic check device
2. leaving out blank checks 3. making out check and leaving blank spaces or writing out check with pencil |
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Describe drawer negligence in notifying bank?
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1.If 1 time forgery must notify bank within 1 yr
2. if multiple forgeries by same forger get 30 days from statement to notify or barred |
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What is the rule for when drawee bank pays on forged instrument in regards to the innoncent party who got paid
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CANNOT recover from the party because of the rule of finality
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But what theory can bank recover from innoncent party on
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Breach of transfer or presentment warranty
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3 possible defendants for conversion action?
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1. The person who stole the instrument
2. A drawee bank that pays an instrument to a person who was not entitled to enforce it commits conversion 3. Co-payee if multiple co-payees required and one payee signs and deposits that payee and the bank have committed conversion |
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If amount of name not filled in but agreed to is it NI
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YES and payee can fill it
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Comaker v- AP
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Co-maker signs on front and is liable jointly and severally but can get contribution if he pays more than he share
AP= signs on back and is liabe secondarily and if gone after and he pays then gets ntoe and all the rights of the note so can go after security |
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Way to release AP's secondarily liability
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Impair or change security by releasing
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If note is lost or destroyed what must maker do to enforce it?
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prove terms of note, why lost, ownership, and ct might ask holder to put up security incase someone else finds if bearer paper and collects on it
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If Holder/payee loses note, but maker pays anyway, does this discharge Maker's obligation?
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If Holder indorsed and then lost then bearer paper, but if did not indorse and then lost then no one could ever qualify as HDC
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Elements for Accord and satisfaction?
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1. Unliquidated or disputed claim
2. Instrument tendered as full satisfaction conspiciously 3. Collection then discharges debtor's obligation |
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Exceptions where no A and S?
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i. Organization designated agent conspiciously then no A and S unless sent to agent
ii. Sends back $ within 90 days to avoid advertant A and S |
