Commercial Paper (Neg. Instruments) Flashcards

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1
Q

What is a negotiable instrument?

A

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.

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2
Q

Define HDC

A

(1) A “Holder” is a person who is negotiated a negotiable instrument.

(2) “Due course” requires:

  1. Holder is negotiates for value,
  2. Negotiates in good faith (i.e., honest in fact & reasonable commercial standards), and
  3. With no notice.
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3
Q

What is special about being a HDC?

A

**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

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