Commercial Paper

Question 1

What are the requirements for a note to be negotiable?

Answer 1

To be negotiable under the Uniform Commercial Code (“UCC”) as adopted by Virginia, an instrument must be a writing, signed by the maker, containing an unconditional promise or order, to pay a fixed amount of money, to an order or bearer, payable on demand or at a definite time, and without stating any additional undertaking or instruction.

Question 2

What is an instrument payable to order and how is it negotiated?

Answer 2

An instrument is payable to order if it identifies a person (e.g., “Pay to the order of Joe Smith”) or order (“Pay Joe Smith or his order”). Consequently, the note was an order instrument. To negotiate an order instrument, the holder must the transfer of possession of the instrument and indorse it.

Question 3

What is a “special indorsement”?

Answer 3

A “special indorsement” names an identified person as indorsee in addition to the indorsement (e.g., “Pay to Nancy Next” /s/ Peter Payee). The indorsee must sign in order for the instrument to be further negotiated.

Question 4

In commercial paper, what happens when an instrument contains conflicting or contradictory terms?

Answer 4

When conflicting or contradictory terms exist within an instrument, handwritten terms take precedence over typewritten terms, typewritten terms over printed terms, and words over numbers.

Question 5

In a commercial paper dispute, can the winner get attorney’s fees?

Answer 5

Generally, the winning party is not entitled to attorney’s fees unless the agreement specifically provides for it. Such a provision is absent here. Additionally, while a statute may grant the winning party the ability to collect attorney’s fees, no such statute is applicable under Virginia law.

Question 6

How long after indorsement till an indorser’s liability discharges?

Answer 6

an indorser’s liability as an indorser of the check is discharged if more than 30 days have passed since the indorsement.

Question 7

An indorser is not liable unless the indorser receives notice of the dishonor (except when waived) within HOW MANY days after the person seeking to hold the indorser liable received notice of the dishonor?

Answer 7

30 days

Question 8

Define a negotiable instrument (VA).

Answer 8

A negotiable instrument is a writing, signed by the maker, containing an unconditional promise, to pay a fixed amount of money, to order or bearer, payable on demand or at a definite time, and without stating any additional undertaking or instruction.

Question 9

May a negotiable instrument contain an express condition to payment? (i.e. I promise to pay if I win the lottery)

Answer 9

HECK NO. If a promise or order contains an express condition to payment, it is not a negotiable instrument.

Question 10

May a negotiable instrument be payable in foreign currency?

Answer 10

A negotiable instrument must be payable in money, which includes currency and currency funds. The principal amount to be paid also must be a fixed amount of money, as defined by the instrument. Under the UCC, a negotiable instrument may instruct that payment be in foreign currency.

Question 11

When must an instrument by payable for it to be negotiable?

Answer 11

A negotiable instrument must be payable either on demand or at a definite time. An instrument is payable at a definite time if it is payable: (i) on a fixed date, (ii) at the end of a definite period after sight or acceptance, or (iii) at a time readily ascertainable when the instrument is issued.

Question 12

Is a transferee a HDC if the original signature was forged?

Answer 12

NOPE> not even if for value, without notice, and in good faith

Question 13

What warranty guarantees all instrument’s signatures are authentic>

Answer 13

transfer warranty

Question 14

Who is liable if a signature on an instrument is not authentic?

Answer 14

A party who transfers a check is liable to the transferee (and to all subsequent transferees if the transfer is for value) if a transfer warranty is breached. Among these warranties is the guarantee that the transferor is a person entitled to enforce the instrument and that all signatures are authentic.

Question 15

Define a check

Answer 15

A check is an order instrument which requires for there to be endorsement by the holder (e.g., a signature) and
transfer to the subsequent party in order to negotiate.

Question 16

Can the supplier of wooden boards to a contractor perfect a lien on the house the contractor was renovating even if the homeowner didn’t have a contract with the suppler?

Answer 16

YES. Supplier is a materialman. To perfect a mechanic’s lien, a general contractor, subcontractor, laborer, or materialman must file a memorandum of lien no later than 90 days from the last day of the month in which the contractor last performed labor or furnished material, and in no event later than 90 days from the time the structure is completed, or the work is otherwise terminated. The memorandum must be filed in the clerk’s office in the county or city in which the building or structure is located and mailed to the owner of the property, and if the claimant is not the general contractor, to the general contractor as well. The claimant must verify the memorandum by oath (i.e., affidavit). The claimant also must file a certification of mailing of a copy of the memorandum of lien to the owner and, if required, to the general contractor.