Ucc Article 3

Front 1

Negotiable instrument

Back 1

1. Unconditional promise or order to pay a fixed amount of money

2. Payable to bearer or order, at the time of issuance or when it comes into hands of holder , on demand or at a definite time

3. No other undertaking or instruction, except:

- collateral

- waiver

- confessed judgment

Front 2

Promise

Back 2

A written undertaking / commitment to pay money signed by the person undertaking to pay

Front 3

order

Back 3

A written instruction to pay money signed by the person giving the instruction

Front 4

Parts of promise or order

Back 4

Written - printed, typed, or reduced to tangible form

money - medium of exchange, currency accepted by a government

signed - any symbol, executed or adopted by person obligated to pay with present intention to adopt or accept a writing

Front 5

Fixed amount

Back 5

The amount of money on the face of the document that can be readily quantifiable

Front 6

bearer and order paper

Back 6

Bearer - whoever has possession can enforce it

order - has a specified named person ( must have the words "order to")

If it has a specified person and also says bearer, then it is bearer paper

Front 7

On demand / definite time

Back 7

On demand - says it is payable on demand, indicates its payable at will of holder, does not state a time ("on sight")

Definite time - on elapse of a definite time, at time readily at your table at the time the instrument is issued.

may be subject to rights of: prepayment, acceleration, and extension

Front 8

No other undertaking / instruction

Back 8

Negotiability forbids inclusion of promises that require something other than the payment of money.

promissory note is ok so long as there are no other conditions.

(Except: collateral, waiver, etc.)

Front 9

Life cycle of instrument

Back 9

Issue: delivery of instrument by the maker for the purpose of giving rights to another person

transfer: delivery by a person other than the issuer for the purpose of giving rights to enforce the instrument (it's implied that voluntary)

Negotiation:

Bearer - upon transfer of physical possession

Order- transfer physical possession + endorsement

Presentment: demand by a PETE to: play the instrument, or to accept a draft

Front 10

Indorsement

Back 10

A signature by someone other than the maker that was made in order to:

1. Negotiate instrument,

2. Restrict payment of the instrument, or

3. Incur indorser's liability

A signature is an indorsement unless the accompanying words, terms of instrument, place of signature, or other circumstances unambiguously indicate that it's not

Front 11

PETE

Back 11

(person entitled to enforce)

- a holder in possession

- someone in possession with the rights of a holder

Front 12

HDC

Back 12

(Holder in due course)

1. Holder of negotiable instrument

2. No apparent evidence of forgery or alteration when issued to holder

3. For value

4. In good faith

5. Without notice of:

- dishonor or overdue

- unauthorized or altered signature on the instrument

- any claim or defense

Front 13

Holder

Back 13

Bear paper - person in physical possession

order paper - payee or indorsee in possession of the instrument

Front 14

For value

Back 14

Issued for a promise of performance to the extent the promise has been performed

Front 15

Good faith

Back 15

Honesty in fact and the observance a reasonable commercial standards of fair dealing

Front 16

Without notice

Back 16

Notice =

1. Actual knowledge

2. Receiving knowledge

3. Should have known based on facts and circumstances

Front 17

Overdue

Back 17

Demand: overdue the next day after the demand has been made (checks 90 days after date)

Timed:

installment note - default in any installment

Accelerated note - day after accelerated

any other - day after due date of principal