Contracts - UCC Art 3 - Presentment, Payment & Dishonor of Negotiable Instruments

Question 1

List the warranties given by transferors.

Answer 1

1. Transferor is entitled to enforce the instrument;
2. All signatures are genuine or authorized;
3. Instrument has not been altered;
4. Instrument not subject to defenses;
5. Transferor has no knowledge of any insolvency proceeding.

Question 2

Define “dishonor.”

Answer 2

Primary party refuses to pay the instrument.

Question 3

Define “presentment warranty.”

Answer 3

Person who presents instrument is authorized to receive payment.

Question 4

Define “presentment.”

Answer 4

Negotiable instrument presented for payment. ID can be required.

Question 5

When must a notice of dishonor be given?

Answer 5

Must be given within 30 days of dishonor or notice of dishonor; for banks must be given by midnight of the next banking day.