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16 Cards in this Set
- Front
- Back
What are the four (4) key concepts in Commercial Paper? |
1. Equivalent of Gold |
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What are the eight (8) Requirements of a Negotiable Instrument? |
1. Writing |
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Bearer Paper: Does the transfer have to be voluntary?
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No.
- Even a thief can be a "holder" of bearer paper. |
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Holder in Due Course: What are the four (4) elements of a HDC?
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1. a holder
2. who gives value 3. in good faith 4. without notice of claims or defenses. |
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Holder in Due Course: What is a HDC analogous to?
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- a good faith purchaser for value.
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HDC: What meets the "holder" requirement?
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Bearer Paper = Possession
Order Paper = Possession + Endorsement |
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HDC: What are the five (5) claims / defenses that an HDC must have "no notice" about?
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The Instrument is... |
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HDC: What does the "Shelter Rule" allow someone who is not an HDC to do?
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- It allows them to elevate their status to HDC, if they are in the chain from a valid HDC. |
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HDC: What are the four (4) "Real Defenses" that an HDC takes subject to?
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1. Infancy
2. Incapacity, Duress, or Illegality 3. Fraud in the Factum 4. Discharge by Insolvency |
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What is the "Properly Payable" Rule?
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- The bank may pay out the customer's money, ONLY if they have followed his instructions exactly. |
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Is a forged or missing signature properly payable?
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No.
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What are the (3) "Presentment Warranties"? |
1. Entitled to enforce, |
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What are the 4"Transfer Warranties"? |
1. the transferor is entitled to enforce the instrument, |
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What is the "Negligence Rule"?
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- If a party, by his negligence, substantially contributes to a material alteration or unauthorized signature, he is precluded from raising defenses against someone who pays in good faith.
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Does a customer have a duty to examine bank statements?
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Yes. He must also "promptly notice" the bank to any problems if he wants to recover.
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What is an "accommodation maker"?
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Basically a co-signor.
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