Tx Commercial Paper

Front 1

Two Instruments of Commercial Paper

Back 1

1. Note
2. Draft

Front 2

Note, Definintion

Back 2

A promise to pay. Two parties are the maker and payee.

Front 3

Draft, Defintion

Back 3

An order to pay. The drawer orders the drawee to pay the payee.

Front 4

Negotiable Instrument,
Defintion (6)

Back 4

1. a signed writing
2. unconditional promise or order
3. pay a fixed amount of money
4. payable to order or bearer
5. on demand or at a definate time
6. no other undertaking

Front 5

Signature, Defintion

Back 5

Any mark with intent to authenticate

Front 6

A promise is not conditional simply because it: (3)

Back 6

1. refers to another writing
2. limits payment to a particular source
3. requires a countersignature

Front 7

Payable in a Fixed Amount of Money means...

Back 7

Principal must be determined by reference to the instrument alone

Front 8

No other undertaking or instruction...
Nickname and Exceptions(3)

Back 8

Courier without luggage requirement mandates no other promises or orders EXCEPT:
- give, mainatin or protect collateral
- confession of judgment
- waiver of the benefit of law protects to obligor

Front 9

Holder, Defintion and Requriements Order/Bearer

Back 9

A person entiteld to enforce the instrument
Bearer: Transfer of Possession
Order: Possession + Indorsement

Front 10

Types of Indorsements

Back 10

1. Special Indorsement
2. Blank Indorsement
3. Qualified Indorsement
4. Unqualified Indorsement
5. Restrictive Indorsement
6. Unrestrictive Indorsement

Front 11

Holder in Due Course,
Definition (4)

Back 11

1. Holder
2. For Value
3. In Good Faith
4. Without Notice

Front 12

Value (3+)

Back 12

1. Consideration
2. Prior Debt
3. Lein or Security Interest in Instrument
NOT: Executory Promise

Front 13

Banks take for Value, using what test?

Back 13

First In First Out Test

Front 14

Good Faith, Defintion

Back 14

Honesty in Fact (subjective) and in observance of reasonable commercial standards (objective)

Front 15

Without Notice Of Irfirmities
(moment of giving value)

Back 15

- forged or altered
- irregular or incomplete
- dishonored or overdue
- claim to the instrument
- notice of defenses or claims in recoupment

Front 16

Shelter Rule

Back 16

With the exception of fraud or illegality,the transfer vests all the rights ofthe transferor

Front 17

Denial of HDC Status
Even if All Elements Met

Back 17

1. Taking over estate
2. Purchase in execution, bankrkuptcy or creditor sale
3. Bulk transaction sale.

Front 18

Rights of a Holder in Due Couse

Back 18

HDC takes free from personal defenses, subject only to real defenses

Front 19

Real Defenses(11)
FAIDS

Back 19

1.Forgery
2.Fraud in the Factum
3.Alteration
4.Adjuticated Insanity
5.Infancy
6.Illegality
7.Duress (extreme)
8.Discharge in Bankruptcy
9.Discharge known to HDC
10.Statute of Limitations
11.Suretyship

Front 20

Fraud in the Factum

Back 20

Fraud w/o reasonable opportunity to learn of character or essential terms

Front 21

Statute of Limitations

Back 21

Three Years
- Dishonored Drafts
- Conversion
- Breach of Warranty
- Against Issuers of Certified Checks
Six Years
- Notes
- CDs