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18 Cards in this Set
- Front
- Back
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Commercial Paper:
Approach to take on exam. |
1) Identify type of paper; 2) identify parties; 3) determine if instrument is negotiable; 4) was instrument properly negotiated?; 5) P's causes of actions; 6) D's defenses; 7) if D held liable, may D pass liability to another party
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Commercial Paper:
What are the two types of commercial paper? |
Notes and drafts
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Commercial Paper:
When is negotiability determined? |
At the time of issuance.
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Commercial Paper:
What is the rule on opting out of negotiability? |
A promise or order that otherwise meets the requirements of a negotiable instrument won't be negotiable if when issued it contains a conspicuous statement that it is not a negotiable instrument. BUT, this rule does not apply to checks.
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Commercial Paper:
Elements of negotiability. |
In writing; signed by maker or drawerl unconditional promise or order to pay; fixed amount; in money; no other undertaking or instruction; payable on demand or at a definite time; containing words of negotiability
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Commercial Paper:
What items make the promise or order conditional and thus not negotiable? |
Express condition to payment; promise or order "subject to" or "governed by" another writing; incorporation by reference.
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Commercial Paper:
What items do not make the promise or order conditional? |
Statement of consideration; reference to another writing ("as per" or "in accordance with"); incorporation by reference of items that would not hurt the holder (rights regarding collateral, prepayment, acceleration); limitation of payment to a particular fund or source; countersignature; consumer protection language.
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Commercial Paper:
What are some permitted undertakings or instructions that do not make an item non-negotiable? |
Promises concerning collateral; confession of judgment clauses (unenforceable under Texas law); waiver of law meant to benefit obligor
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Commercial Paper:
What is order paper? |
Paper that is payable only to the person named on the instrument or at his order.
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Commercial Paper:
What is bearer paper? |
Paper that is payable to anyone legitimately possessing the instrument.
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Commercial Paper:
What determines holder status? |
Bearer paper = possession only
Order paper = possession plus necessary indorsements |
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Commercial Paper:
What is a blank indorsement? |
Signature not accompanied by the naming of a specific indorsee. Creates bearer paper which may then be negotiated by delivery alone.
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Commercial Paper:
What is a special indorsement? |
Has the payee's signature plus the designation of a new person to whom instrument is payable. This creates order paper.
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Commercial Paper:
What is a restrictive indorsement? |
Limits what may be done with the instrument. A person or depositor bank must pay the instrument consistently with the indorsement or will be deemed to have converted the instrument.
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Commercial Paper:
What determines the identification of person to whom instrument is payable? |
The intent of the issuer.
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Commercial Paper:
What are the elements of a HDC? |
Negotiable instrument; holder; authenticity not apparently questioned; holder must pay value; good faith; without notice at time of instrument acquisition.
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Commercial Paper:
Legal standard for "authenticity not apparently questioned." |
Instrument does not bear such evidence of forgery or alteration or is not otherwise so irregular or incomplete as to call its authenticity into question
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Commercial Paper:
What is the legal standard for "good faith?" |
Honesty in fact (subjective) and observance of rznble commercial standards of fair dealing (objective).
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