Question 1

antecedent claim

Accepted Answer

- a preexisting claim - in negotiable instruments law, taking an instrument in satisfaction of an antecedent claim is taking the instrument for value - that is, for valid consideration

Question 2

blank indorsement

Accepted Answer

- an indorsement that specifies no particular indorsee an can consist of a mere signature - an order instrument that is indorsed in blank becomes a bearer instrument

Question 3

holder in due course (HDC)

Accepted Answer

- a holder who acquires a negotiable instrument for value; in good faith; and without notice that the installment is overdue, that it has been dis honored, that any person has a defense against it or a claim to it, or that the instrument contains unauthorized signatures, alterations, or is so irregular or incomplete as to call into question its authenticity

Question 4

indorsee

Accepted Answer

- a person to whom a negotiable instrument is transferred by indorsement

Question 5

indorsement

Accepted Answer

- a signature placed on an instrument for the purpose of transferring one's ownership rights in the instrument

Question 6

indorser

Accepted Answer

- a person who transfers an instrument by signing (indorsing) it and delivering it to another person

Question 7

negotiation

Accepted Answer

-

Question 8

qualified indorsement

Accepted Answer

- an indorsement on a negotiable instrument in which the indorser disclaims any contract liability on the instrument; the notation "without recourse" is commonly used to create a qualified indorsement

Question 9

restrictive indorsement

Accepted Answer

- any indorsement on a negotiable instrument that requires the indorsee to comply with certain instructions regarding the funds involved - a restructure indorsement does not prohibit the further negotiation of the instrument

Question 10

shelter principle

Accepted Answer

- the principle that the holder if a negotiable instrument who cannot qualify as a holder in due course (HDC), but who derives his or her title through an HDC, acquires the rights of an HDC

Question 11

special indorsement

Accepted Answer

- an indorsement on an instrument that indicates the specific person to whom the indorser intends to make the instrument payable; that is, it names the indorsee

Question 12

trust indorsement

Accepted Answer

- an indorsement for the benefit of the indorser or a third person; also known as an agency indorsement - the indorsement results in legal title vesting in the original indorsee

Question 13

SAMPLE TEST QUESTIONS 1. Mortimer negotiates an instrument to Nadia. Negotiation is the transfer of an instrument : a. for valuable consideration, under a contract b. in such form that the transferee becomes a holder c. pursuant to preliminary contract discussions d. without the payment of a recognized medium of exchange

Accepted Answer

ANSWER : (B) CORRECT : (B)

Question 14

SAMPLE TEST QUESTIONS 2. Edgar possesses a check that is "payable to cash." Fawn steals the check and delivers it to Godfrey, an innocent third person. All rights to the check are : a. Edgar's b. Fawn's c. Godfrey's d. lost

Accepted Answer

ANSWER : (C) CORRECT : (C)

Question 15

SAMPLE TEST QUESTIONS 3. Giuseppe writes a check "payable to bearer" and hands it to Hamilton. Imogene steaks the check and delivers it to Jocekyn, an innocent third person. Hamilton can recover the proceeds of the check from : a. Imogene b. Jocelyn c. Giuseppe d. no one

Accepted Answer

ANSWER : (D) CORRECT : (A)

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Chapter 13 - Transferability and Holder in Due Course Flashcards

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