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8 Cards in this Set
- Front
- Back
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What are the two types of liability on commercial paper?
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1. CONTRACT OR SIGNATURE LIABILITY; OR
2. WARRANTY OR TRANSFER LIABILITY |
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What is Signature (contract) liability generally?
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When you sign it, you promise to pay it, and that's how you get sued.
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Who has signature liability? (3)
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1. The maker
2. The indorser 3. The drawer |
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What is the effect of writing the words "without recourse" with the signature?
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- Used by indorsers and drawers.
- disclaims signature liability |
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What is Transfer (warranty) liability?
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liability for selling a defective instrument.
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Who will be liable for transfer (warranty) liability?
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Any transferor who SELLS the negotiable instrument.
- If the transferor is a donor he is not liable |
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Who is entitled to sue under transfer liability?
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- If the defendant indorses warranties run with the instrument and anyone who is not a donor can sue
- If the D did not indorse then only the immediate transferee |
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What are the FIVE warranties made by a defendant transferor?
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1. Plaintiff has good title to the instrument
2. all signatures are genuine and authorized (not forged) 3. Instrument has not been materially altered 4. It is enforceable - there is no defense or claim good against the defendant; AND 5. No knowledge of bankruptcy or insolvency of the maker or drawer |
