Commercial Paper (Neg. Instruments) Flashcards
What is a negotiable instrument?
Def: (1) A writing (2) signed by maker/drawer containing (3) an unconditional promise or order to pay a fixed amount in money (4) on demand or at a definite time (5) to order or bearer (6) containing no other undertaking or instruction.
Define HDC
(1) A “Holder” is a person who is negotiated a negotiable instrument.
(2) “Due course” requires:
- Holder is negotiates for value,
- Negotiates in good faith (i.e., honest in fact & reasonable commercial standards), and
- With no notice.
What is special about being a HDC?
**An HDC can enforce the instrument against the maker/drawer subject only to her real defenses; takes free of personal defenses. **
Real defenses include: forgery, fraud in the execution, alteration, adjudicated incompetency, infancy, illegality, duress, discharge, SOL, suretyship.
Personal defenses include: failure of consideration, fraud in the inducement, waiver, estoppel, and payment