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11 Cards in this Set
- Front
- Back
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What is required to have Holder Status?
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Possession of the negotiable instrument; and good title. The method of obtaining good title depends on the words of negiability used. If bearer language then possession alone gives you good title; if order language then possession plus necessary endorcement is required to give you good title.
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What are the different types of endorsements.
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Blank endorsement is just the payee's signature which effectively creates bearer paper.
Special endorsement is the payee's signature pluse designation of someone it is payable to, this effectively creates order paper. For deposit or collection, this is a restrictive endorcement limiting what may be done with the instrument. |
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What are the benefits of due course status
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One of the major benefits of due course status is that you are not subject to the usual defenses.
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What are the elements of HDC Status.
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1) negotiable instrument; 2) holder; 3) authenticity not apparently questioned - no evidence of forgery, 4) holder must pay value - it can't be a gift, 5) good faith, must have honesty in fact and reasonable commercial standards of good dealing; 6) without notice at the time of instrument acquisition.
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What are the 7 things you must be without notice of at the time of instrument acquisition.
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1) that the instrument is overdue, 2) instrument dishonored, 3) uncured default with respect to payment of another instrument issued as part of the same series, 4) unauthorized signature, 5) alteration, 6) any claims, 7) any defenses or claim in recoupment.
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Name some phrases that are considered bearer language
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"payable to bearer"
"payable to the order of bearer" Indication that possessor is entitled to payment, or no payee stated, or "to cash" or "to order of cash", or not payable to an identified person. |
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How many parties are involved in a note and who are they?
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A promise to pay is a 2 party instrument.
The maker is the promisor (obligor) or person who promises to pay. The payee is the promisee, the person entitled to payment |
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How many parties are involved in an order to pay and who are they?
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An order to pay money is a 3 party instrument.
The drawer is the person ordering payment. The drawee is the person to make the payment. The payee is the person to receive the payment. |
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What are the different types of checks.
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Ordinary check,
Certified check, Cashier's check, Teller's check, and Traveler's check |
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What is the meaning of negotiability and when is it determined?
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Negotiability refers tot he form of the instrument and is determined at the time of issuance.
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What are the elements of negotiability?
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It has to be in writing; has to be signed by the maker or drawer, it must be an unconditional promise or order to pay (cannot be just a mere acknowledgment of a debt like an IOU), it has to be for a fixed amount, it has to be in money (not goods or services), it has to have no other undertaking or instruction, must be payable on demand or at a definate time, and it must contain words of negotiability
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