Commercial paper Flashcards
What is an indorser’s liability on a check?
Secondarily liable
HDC is subject to the real defense of
Infancy
How does a note become negotiable?
1) a writing signed by its maker,
2) containing an unconditional promise to pay a fixed amount of money to the bearer
3) on demand without stating any additional undertaking or instructions.
Bearer paper can be negotiated simply by
Transfer to another person
A person entitled to enforce an instrument who loses the instrument can nevertheless enforce it, provided
Person is able to prove terms of instrument and their right to enforce it
Consequence of including the words “Collection guaranteed.” On note
limits co-maker’s liability, generally making him liable only if the finance company is unable to compel maker to pay the note through judicial process.
When an employee, such as the treasurer here, is entrusted with responsibility with respect to a check, a fraudulent indorsement of that check by the employee is treated as an
Effective indorsement… it is treated as if the payee to whom the check is written had signed the check in the favor of a person who, in good faith, pays the check or takes it for value or for collection.
Shelter principle
transferee generally has the same rights to enforce an instrument as the transferor had.
Is a personal defense (lack of consideration) valid in an action against an HDC
No
Is a personal defense (lack of consideration) valid in an action against an HDC
No
Is An authorized agent who signs his own name as drawer of a check of the principle personally liable if the check is drawn on the principal’s account and identifies the principal?
No
Principal is liable on an instrument signed by
Agents or an agent
If agent is authorized to sign for P, P is liable irrespective of whether
Agent signed P’s name, agent’s name or a combo thereof
Accommodation party
Type of surety or one who guarantees debt of another
To be an accommodation party, accommodator cannot
Have received a direct benefit from the instrument
