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69 Cards in this Set
- Front
- Back
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Negotiable Instrument - Page 25 3-104(a) |
An unconditional promise or order to pay a fixed amount of money, with or without interest or other charges described in the promise or order, if it: (1) is payable to bearer or to order at the time it is issued or first comes into possession of a holder; (2) is payable on demand or at a definite time; and (3) does not state any other undertaking or instruction by the person promising or ordering payment. |
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Bearer - Page 31 1-201(b) |
A person in possession of a negotiable instrument, document of title, or certified security that is payable to bearer or indorsed in blank. |
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Bank - Page 59 1-201(b)(4) |
A person engaged in the business of banking and includes a savings bank, savings and loan association, credit union, and trust company. |
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Genuine - Page 60 1-201(b)(19) |
Free from forgery or counterfeiting. |
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Good Faith - Page 58 1-201(b)(20) |
Honesty in fact and the observance of reasonable commercial standards of fair dealing. |
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Holder - Page 41 1-201(b)(21) |
The person in possession of a negotiable instrument that is payable either to bearer or to an identified person that is the person in possession. |
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Insolvency Proceeding - Page 60 1-201(b)(22) |
Includes an assignment for the benefit of creditors or other proceeding intended to liquidate or rehabilitate the estate of the person involved. |
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Insolvent - Page 60 1-201(b)(23) |
Having generally ceased to pay debts in the ordinary course of business other than as a result of a bona fide dispute; being unable to pay debts as they become due; or being insolvent within the meaning of federal bankruptcy law. |
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Money - Page 37, 38 1-201(b)(24) |
A medium of exchange currently authorized or adopted by a domestic or foreign government. The term includes a monetary unit of account established by an intergovernmental organization or by agreement between two or more countries. |
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Party - Page 60 1-201(b)(26) |
As distinguished from "third party", means a person that has engaged in a transaction or made an agreement subject to the UCC. |
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Person - Page 60 1-201(b)(27) |
An individual, corporation, business trust, estate, trust, partnership, LLC, association, joint venture, government, governmental subdivision, agency, or instrumentality, public corporation, or any other legal or commercial entity. |
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Representative - Page 84 1-201(b)(33) |
A person empowered to act for another, including an agent, an officer of a corporation or association, and a trustee, executor, or administrator of an estate. |
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Signed - Page 30, 60, 81 1-201(b)(37) |
Includes using any symbol executed or adopted with present intention to adopt or accept a writing. A complete signature is not necessary. The symbol may be printed, stamped, or written; it may be initials or a thumbprint. It may be on any part of the document and in appropriate cases may be found in a billhead or letterhead. The question is always whether the symbol was executed or adopted by the party with present intention to adopt or accept the writing. |
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Unauthorized Signature - Page 86 1-201(b)(41) |
A signature made without actual, implied, or apparent authority. The term includes a forgery. |
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Writing - Page 30, 61 1-201(b)(43) |
Includes printing, typewriting, or any other intentional reduction to tangible form. "Written" has a corresponding meaning. |
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Acceptor - Page 43 3-103(a)(1) |
A drawee who has accepted a draft. |
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Drawee - Page 43 3-103(a)(4) |
A person ordered in a draft to make payment. |
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Drawer - Page 43 3-103(a)(5) |
A person who signs or is identified in a draft as a person ordering payment. |
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Maker - Page 42, 43 3-103(a)(7) |
A person who signs or is identified in a note as a person undertaking to pay. |
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Order - Page 29, 32 3-103(a)(8) |
A written instruction to pay money signed by the person giving the instruction. The instruction may be addressed to any person, including the person giving the instruction, or to one or more persons jointly or in the alternative but not in succession. An authorization to pay is not an order unless the person authorized to pay is also instructed to pay. The definition of "order" includes an instruction given by the signer to itself. The most common example of this kind of order is a cashier's check. |
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Promise - Page 29, 32 3-103(a)(12) |
A written undertaking to pay money signed by the person undertaking to pay. An acknowledgment of an obligation by the obligor is not a promise unless the obligor also undertakes to pay the obligation. |
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Remitter - Page 43 3-103(a)(15) |
A person who purchases an instrument from its issuer if the instrument is payable to an identified person other than the purchaser. The purchaser of a cashier's check is the remitter of the cashier's check if the purchaser is not named as the payee of the cashier's check. |
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Instrument - Page 28 3-104(b) |
A negotiable instrument. |
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Check - Page 43 3-104(c) |
A draft, other than a documentary draft, payable on demand and drawn on a blank or a cashier's check or teller's check. An instrument may be a check even though it is described on its face by another term, such as "money order." An order that meets all of the requirements of subsection (a), except paragraph (1), and otherwise falls within the definition of "check" in subsection (1) is a negotiable instrument and a check. |
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Note or Draft - Page 42 3-104(e) |
An instrument is a "note" if it is a promise and is a "draft" if it is an order. If an instrument falls within the definition of both "note" and "draft," a person entitled to enforce the instrument may treat it as either. |
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Check - Page 43 3-104(f) and (c) |
(f)"Check" means (i) a draft, other than a documentary draft, payable on demand and drawn on a bank or (ii) a cashier's check or teller's check. An instrument may be a check even though it is described on its face by another term, such as "money order." (c) An order that meets all of the requirements of subsection (a), except paragraph (1), and otherwise falls within the definition of "check" in subsection (f) is a negotiable instrument and a check. |
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Cashier's Check - Page 43 3-104(g) |
A draft with respect to which the drawer and drawee are the same bank or branches of the same bank. |
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Teller's Check - Page 44 3-104(h) |
A draft drawn by a bank (i) on another bank, or (ii) payable at or through a bank. |
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Traveller's Check - Page 44 3-104(i) |
An instrument that (i) is payable on demand, (ii) is drawn on or payable at or through a bank, (iii) is designated by the term "traveler's check" or by a substantially similar term, and (iv) requires, as a condition to payment, a countersignature by a person whose specimen signature appears on the instrument. |
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Issue of Instrument - Page 41, 70 3-105 |
(a) "Issue" means the first delivery of an instrument by the maker or drawer, whether to a holder or nonholder, for the purpose of giving rights on the instrument to any person. (c) "Issuer" applies to issued and unissued instruments an means a maker or drawer of an instrument. |
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Non-Issuance - Page 41 3-105(b) |
(b) An unissued instrument, or an unissued incomplete instrument that is completed, is binding on the maker or drawer, but nonissuance is a defense. An instrument that is conditionally issued or is issued for a special purpose is binding on the maker or drawer, but failure of the condition or special purpose to be fulfilled is a defense.
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Unconditional Promise or Order - Page 33 3-106 |
(a) A promise or order is unconditional unless it states (i) an express condition to payment, (ii) that the promise or order is subject to or governed by another record, or (iii) that rights or obligations with respect to the promise or order are stated in another record. A reference to another record does not of itself make the promise or order conditional. (b) A promise or order is not make conditional (i) by reference to another record or statement of rights with respect to collateral, prepayment, or acceleration, or (ii) because payment is limited to resort to a particular fund or source. |
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Failure to Countersign a Travelers' Check - Pg. 33 3-106(c) |
If a promise or order requires, as a condition to payment, a countersignature by a person whose specimen signature appears on the promise or order, the condition does not make the promise or order conditional for the purposes of Section 3-104(a). If the person whose specimen signature appears on an instrument fails to countersign the instrument, the failure to countersign is a defense to the obligation of the issuer, but the failure does not prevent a transferee of the instrument from becoming a holder of the instrument. |
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Instrument Payable in Foreign Money - Page 38 3-107 |
Unless the instrument otherwise provides, an instrument that states the amount payable in foreign money may be paid in the foreign money or in an equivalent amount in dollars calculated by using the current bank-offered spot rate at the place of payment for the purchase of dollars on the day on which the instrument is paid. |
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Payable on Demand - Page 42 3-108(a) |
(a) A promise or order is "payable on demand" if it (i) states that it is payable on demand or at sight, or otherwise indicates that it is payable at the will of the holder, or (ii) does not state any time of payment. |
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Payable at a Definite Time - Page 42 3-108(b) |
A promise or order is "payable at a definite time" if it is payable on elapse of a definite period of time after sight or acceptance or at a fixed date or dates or at a time or times readily ascertainable at the time the promise or order is issued, subject to rights of (i) prepayment, (ii) acceleration, (iii) extension at the option of the holder, or (iv) extension to a further definite time at the option of the maker or acceptor or automatically upon or after a specified act or event. |
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Payable to Bearer or to Order - Page 39 3-109 |
(a) A promise or order is payable to bearer if it: (1) states that it is payable to bearer or to the order of bearer or otherwise indicates that the person in possession of the promise or order is entitled to payment; (2) does not state a payee; or (3) states that it is payable to or to the order of cash or otherwise indicates that it is not payable to an identified person. (b) A promise or order that is not payable to bearer is payable to order if it is payable (i) to the order of an identified person or (ii) to an identified person or order. A promise or order that is payable to order is payable to the identified person. (c) An instrument payable to bearer may become payable to an identified person if it is specially indorsed. |
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Date of Instrument - Page 64 3-113 |
(a) An instrument may be antedated or postdated. The date stated determines the time of payment if the instrument is payable at a fixed period after date. Except as provided in 4-401(c), an instrument payable on demand is not payable before the date of the instrument. (b) If an instrument is undated, its date is the date of its issue or, in the case of an unissued instrument, the date it first comes into possession of a holder. |
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Contradictory Terms of Instrument - Page 66 3-114 |
If an instrument contains contradictory terms, typewritten terms prevail over printed terms, handwritten terms prevail over both, and words prevail over numbers. |
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Incomplete Instrument - Page 184 3-115 |
"Incomplete instrument" means a signed writing, whether or not issued by the signer, the contents of which show at the time of signing that it is incomplete but that the signer intended it to be completed by the addition of words or numbers.
*See pages 184-185 (b), (c), (d) for further instruction. |
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Joint and Several Liability; Contribution - Pg. 66 3-116 |
(a) Except as provided in the instrument, two or more persons who have the same liability on an instrument as makers, drawers, acceptors, indorsers who indorse as joint payees, or anomalous indorsers are jointly and severally liable in the capacity in which they sign. (b) Except as provided in 3-419(f) or by agreement of the affected parties, a party having joint and several liability who pays the instrument is entitled to receive from any party having the same joint and several liability contribution in accordance with applicable law. |
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Other Agreements Affecting Instruments - Pg. 36 3-117 |
Subject to applicable law regarding exclusion of proof of contemporaneous or previous agreements, the obligation of a party to an instrument to pay the instrument may be modified, supplemented, or nullified by a separate agreement of the obligor and a person entitled to enforce the instrument, if the instrument is issued or the obligation is incurred in reliance on the agreement or as part of the same transaction giving rise to the agreement. To the extent an obligation is modified, supplemented, or nullified by an agreement under this section, the agreement is a defense to the obligation. |
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Notice of Right to Defend Action - Page 69 3-119 |
In an action for breach of an obligation for which a third person is answerable over pursuant to this Article or Article 4, the defendant may give the third person notice of the litigation in a record, and the person notified may then give similar notice to any other person who is answerable over. If the notice states (i) that the person notified may come in and defend and (ii) that failure to do so will bind the person notified in an action later brought by the person giving notice as to any determination of fact common to the two litigations, the person notified is so bound unless after seasonable receipt of the notice the person notified does come in and defend. |
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Negotiation - Page 50 3-201 |
(a) "Negotiation" means a transfer of possession, whether voluntary or involuntary, of an instrument by a person other than the issuer to a person who thereby becomes its holder. (b) Except for negotiation by remitter, if an instrument is payable to an identified person, negotiation requires transfer of possession of the instrument and its indorsement by the holder. If an instrument is payable to bearer, it may be negotiated by transfer of possession alone. |
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Negotiation Subject to Rescission - Page 95 3-202 |
(a) Negotiation is effective even if obtained (i) from an infant, a corporation exceeding its powers, or a person without capacity, (ii) by fraud, duress, or mistake, or (iii) in breach of duty or as part of an illegal transaction.
(b) To the extent permitted by other law, negotiation may be rescinded or may be subject to other remedies, but those remedies ma not be assured against a subsequent holder in due course or a person paying the instrument in good faith and without knowledge of facts that are a basis for rescission or other remedy. |
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Indorsement - Page 44 3-204(a) |
"Indorsement" means a signature, other than that of a signor as maker, drawer, or acceptor, that alone or accompanied by other words is made on an instrument for the purpose of (i) negotiating the instrument, (ii) restricting payment of the instrument, or (iii) incurring indorser's liabilty on the instrument, but regardless of the intent of the signor, a signature and its accompanying words is an indorsement unless the accompanying words, terms of the instrument, place of the signature, or other circumstances unambiguously indicate that the signature was made for a purpose other than indorsement. For the purpose of determining whether a signature is made on an instrument, a paper affixed to the instrument is a part of the instrument. |
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Indorser - Page 44-45 3-204(b), (c), (d) |
(b) "Indorser" means a person who makes an indorsement. (c) For the purpose of determining whether the transferee of an instrument is a holder, an indorsement that transfers a security interest in the instrument is effective as an unqualified indorsement of the instrument. (d) If an instrument is payable to a holder under a name that is not the name of the holder, indorsement may be made by the holder in the name stated in the instrument or in the holder's name or both, but signature in both names may be required by a person paying or taking the instrument for value or collection. |
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Special Indorsement - Page 46 3-205(a) |
If an indorsement is made by the holder of an instrument, whether payable to an identified person or payable to bearer, and the indorsement identifies a person to whom it makes the instrument payable, it is a "special indorsement." When specially indorsed, an instrument becomes payable to the identified person and may be negotiated only by the indorsement of that person. The principles stated in 3-110 apply to apply to special indorsemnts. |
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Blank Indorsement - Page 47 3-205(b), (c) |
(b) If an indorsement is made by the holder of an instrument and it is not a special indorsement, it is a "blank indorsement." When indorsed in blank, an instrument becomes payable to bearer and may be negotiated by transfer of possession alone until specially indorsed. (c) The holder may convert a blank indorsement that consists only of a signature into a special indorsement by writing, above the signature of the indorser, words identifying the person whom the instrument is made payable. |
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Anomalous Indorsement - Page 47 3-205(d) |
"Anomalous indorsement" means an indorsement made by a person who is not the holder of the instrument. An anomalous indorsement does not affect the manner in which the instrument may be negotiated. |
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Reacquisition - Page 102-103 3-207 |
Reacquisition of an indorsement occurs if it is transferred to a former holder, by negotiation or otherwise. A former holder who reacquires the instrument may cancel indorsements made after the reacquirer first became a holder of the instrument. If the cancellation causes the instrument to be payable to the reacquirer or to bearer, the reacquirer may negotiate the instrument. An indorser whose indorsement is cancelled is discharged, and the discharge is effective against any subsequent holder. |
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Person Entitled to Enforce an Instrument - Pg. 52 3-301 |
"Person entitled to enforce" an instrument means (i) the holder of the instrument, (ii) a nonholder in possession of the instrument who has the rights of a holder, or (iii) a person not in possession of the instrument who is entitled to enforce the instrument pursuant to 3-309 or 3-418(d). A person may be a person entitled to enforce the instrument even though the person is not the owner of the instrument or is in wrongful possession of the instrument. |
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Holder in Due Course - Page 53 3-302 |
(a) "Holder in due course" means the holder of an instrument if: (1) the instrument when issued or negotiated to the holder does not bear such apparent evidence of forgery or alteration or is not otherwise so irregular or incomplete as to call into question its authenticity; and (2) the holder took the instrument (i) for value, (ii) in good faith, (iii) without notice that the instrument is overdue or has been dishonored or that there is an uncured default with respect to payment of another instrument issued as part of the same series, (iv) without notice that the instrument contains an unauthorized signature or has been altered, (v) without notice of any claim to the instrument described in 3-306, and (vi) without notice that any party has a defense or claim in recoupment described in 3-305(a). * See additional sections in book. |
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Value - Page 171 3-303(a) |
(a) An instrument is issued or transferred for value if: (1) the instrument is issued or transferred for a promise of performance, to the extent the promise bas been performed; (2) the transferee acquires a security interest or other lien in the instrument other than a lien obtained by judicial proceeding; (3) the instrument is issued or transferred as payment of, or as security for, an antecedent claim against any person, whether or not the claim is due; (4) the instrument is issued or transferred in exchange for a negotiable instrument; or (5) the instrument is issued or transferred in exchange for the incurring of an irrevocable obligation to a third party by the person taking the instrument. |
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Consideration - Page 171 3-303(b) |
"Consideration" means any consideration sufficient to support a simple contract. The drawer or maker of an instrument has a defense if the instrument is issued without consideration. If an instrument is issued for a promise of performance, the issuer has a defense to the extent performance of the promise is due and the promise has not been performed. If an instrument is issued for value as stated in subsection (a), the instrument is also issued for consideration. |
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Claims to an Instrument - Page 133 3-306 |
A person taking an instrument, other than a person having rights of a holder in due course, is subject to a claim of a property possessory right in the instrument or its proceeds, including a claim to rescind a negotiation and to recover the instrument or its proceeds. A person having rights of a holder in due course takes free of the claim to the instrument. |
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Signature - Page 81 3-401 |
(a) A person is not liable on an instrument unless (i) the person signed the instrument, or (ii) the person is represented by an agent or representative who signed the instrument and the signature is binding on the represented person under 3-402. (b) A signature may be made (i) manually or by means of a device or machine, and (ii) by the use of any name, including a trade or assumed name, or by a word, mark, or symbol executed or adopted by a person with present intention to authenticate a writing. |
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Drawee Not Liable on Unaccepted Draft - Pg. 89 3-408 |
A check or other draft does not of itself operate as an assignment of funds in the hands of the drawee available for its payment, and the drawee is not liable on the instrument until the drawee accepts it. |
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Acceptance of Draft - Page 77-78 3-409(a)-(c) |
(a) "Acceptance" means the drawee's signed agreement to pay a draft as presented. It must be written on the draft and may consist of the drawee's signature alone. Acceptance may be made at any time and becomes effective when notification pursuant to instructions is given or the accepted draft is delivered for the purpose of giving rights on the acceptance to any person. (b) A draft may be accepted although it has not been signed by the drawer, is otherwise incomplete, is overdue, or has been dishonored. (c) If a draft is payable at a fixed period after sight and the acceptor fails to date the acceptance, the holder may complete the acceptance by supplying a date in good faith. |
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Certified Check (Acceptance) - Page 78 3-409(d) |
"Certified check" means a check accepted by the bank on which it is drawn. Acceptance may be made as stated in subsection (a) or by a writing on the check which indicates that the check is certified. The drawee of a check has no obligation to certify the check, and refusal to certify is not dishonor of the check. |
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Acceptance Varying Draft - Page 78 3-410 |
(a) If the terms of a drawee's acceptance vary from the terms of the draft as presented, the holder may refuse the acceptance and treat the draft as dishonored. In that case, the drawee may cancel acceptance. (b) The terms of a draft are not varied by an acceptance to pay at a particular bank or place in the U.S., unless the acceptance states that the draft is to be paid only at that bank or place. (c) If the holder assents to an acceptance varying the terms of a draft, the obligation of each drawer and indorser that does not expressly assent to the acceptance is discharged. |
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Obligation of Issuer of Note or Cashier's Check - Pg. 86 3-412 |
The issuer of a note or cashier's check or other draft drawn on the drawer is obliged to pay the instrument (i) according to its terms at the time it was issued or, if not issued, at the time it first came into possession of a holder, or (ii) if the issuer signed an incomplete instrument, according to its terms when completed, to the extent stated in 3-115 & 3-407. The obligation is owed to a person entitled to enforce the instrument or to an indorser who paid the instrument under 3-415. |
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Delayed Presentation of Check and Obligation of Drawer - Pg. 93 3-414(f) |
If (i) a check is not presented for payment or given to a depository bank for collection within 30 days after its date, (ii) the drawee suspends payments after expiration of the 30-day period without paying the check, and (iii) because of the suspension of payments, the drawer is deprived of funds maintained with the drawee to cover payment of the check, the drawer to the extent deprived of funds may discharge its obligation to pay the check by assigning to the person entitled to enforce the check the rights of the drawer against the drawee with respect to the funds. |
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Delayed Presentation of Check and Obligation of Drawer - Pg. 93 3-414(e) |
If an indorser of a check is liable under subsection (a) and the check is not presented for payment, or given to a depository bank for collection, within 30 days after the day the indorsement was made, the liability of the indorser under subsection (a) is discharged. |
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Effect of Delayed Notice of Breach of Transfer Warranties - Pg. 93 3-416(c) |
The warranties stated in subsection (a) cannot be disclaimed with respect to checks. Unless notice of a claim for breach of warranty is given to the warrantor within 30 days after the claimant has reason to know of the breach and the identity of the warrantor, the liability of the warrantor under subsection (b) is discharged to the extent of any loss caused by the delay in giving notice of the claim. |
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Beginning of the Running of the Statute of Limitations for Breaches of Transfer Warranties - Pg. 94 3-416(d) |
A cause of action for breach of warranty under this section accrues when the claimant has reason to know of the breach. |
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Effect of Delayed Notice of Breach of Presentment Warranties - Page 94 3-417(e) |
The warranties stated in subsection (a) and (d) cannot be disclaimed with respect to checks. Unless notice of a claim for breach of warranty is given to the warrantor within 30 days after the claimant has reason to know of the breach and the identity of the warrantor, the liability of the warrantor under subsection (b) or (d) is discharged to the extent of any loss caused by the delay in giving notice of the claim. |
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Beginning of the Running of the Statute of Limitations for Breaches of Presentment Warranties - Page 94 3-417(f) |
A cause of action for breach of warranty under this section accrues when the claimant has reason to know of the breach. |
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Discharge and Effect of Discharge - Pg. 146 3-601 |
(a) The obligation of a party to pay the instrument is discharged as stated in this Article or by an act or agreement with the party which would discharge an obligation to pay money under a simple contract. (b) Discharge of the obligation of a party is not effective against a person acquiring rights of a holder in due course of the instrument without notice of the discharge. |
