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21 Cards in this Set
- Front
- Back
Two Instruments of Commercial Paper
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1. Note
2. Draft |
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Note, Definintion
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A promise to pay. Two parties are the maker and payee.
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Draft, Defintion
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An order to pay. The drawer orders the drawee to pay the payee.
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Negotiable Instrument,
Defintion (6) |
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 |
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Signature, Defintion
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Any mark with intent to authenticate
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A promise is not conditional simply because it: (3)
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1. refers to another writing
2. limits payment to a particular source 3. requires a countersignature |
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Payable in a Fixed Amount of Money means...
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Principal must be determined by reference to the instrument alone
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No other undertaking or instruction...
Nickname and Exceptions(3) |
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 |
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Holder, Defintion and Requriements Order/Bearer
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A person entiteld to enforce the instrument
Bearer: Transfer of Possession Order: Possession + Indorsement |
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Types of Indorsements
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1. Special Indorsement
2. Blank Indorsement 3. Qualified Indorsement 4. Unqualified Indorsement 5. Restrictive Indorsement 6. Unrestrictive Indorsement |
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Holder in Due Course,
Definition (4) |
1. Holder
2. For Value 3. In Good Faith 4. Without Notice |
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Value (3+)
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1. Consideration
2. Prior Debt 3. Lein or Security Interest in Instrument NOT: Executory Promise |
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Banks take for Value, using what test?
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First In First Out Test
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Good Faith, Defintion
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Honesty in Fact (subjective) and in observance of reasonable commercial standards (objective)
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Without Notice Of Irfirmities
(moment of giving value) |
- forged or altered
- irregular or incomplete - dishonored or overdue - claim to the instrument - notice of defenses or claims in recoupment |
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Shelter Rule
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With the exception of fraud or illegality,the transfer vests all the rights ofthe transferor
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Denial of HDC Status
Even if All Elements Met |
1. Taking over estate
2. Purchase in execution, bankrkuptcy or creditor sale 3. Bulk transaction sale. |
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Rights of a Holder in Due Couse
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HDC takes free from personal defenses, subject only to real defenses
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Real Defenses(11)
FAIDS |
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 |
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Fraud in the Factum
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Fraud w/o reasonable opportunity to learn of character or essential terms
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Statute of Limitations
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Three Years
- Dishonored Drafts - Conversion - Breach of Warranty - Against Issuers of Certified Checks Six Years - Notes - CDs |