Commercial Paper

Question 1

What is Negotiation?

Answer 1

Negotiation is the transfer of possession of an instrument, whether voluntary or involuntary, by a person other than the issuer to a person who thereby becomes its holder.

Question 2

What is a holder

Answer 2

holder is a person in possession of the instrument if it is bearer paper. if payable to identified person, that person is the holder as soon as they have possession.

Question 3

bearer paper

Answer 3

negotiable instrument that is negotiated simply by transferring possession of the instrument

Question 4

order paper

Answer 4

instrument payable to an identified person, transferred with possession and indorsement

Question 5

Elements of negotiability

Answer 5

In writing;
intentionally signed ;
unconditional ;
promise or order ;
to a pay a fixed amount; 
in money; 
no other unauthorized promise or instruction; payable on demand;
to bearer or order

Question 6

Is the Commercial paper negotiated?

Answer 6

proper endorsement plus delivery; bearer paper requires only delivery

Question 7

Holder in Due Course

Answer 7

a holder (bearer or possession of properly endorsed order paper); for value; in good faith; without notice ( of overdue, dishonor, claim, defenses, unauthorized signature)

Question 8

HDC is subject to real defenses

Answer 8

FAIDS
Forgery, Fraud int he factum; Alteration, Adjudicated insanity; Infancy, Illegality; Duress, Discharge in Insolvency; Suretyship Defenses, Statute of limitations

Question 9

HDC takes free over PERSONAL defenses

Answer 9

Breach of contract or breach of warranty; Lack or failure of consideration; Fraud in the inducement; Illegality (when statute makes is voidable) ; Un-adjudicated mental incapacity; Other Defenses