CP

Question 1

Holder in due course

Answer 1

• already a holder
• pay value (give, do, forgivev)
• take instrument in GF
• w/o notice of problems affecting obligor’s obligation to pay

Question 2

Transfer warranties

Answer 2

• warrantor can enforce NI
• all signatures on NI are authentic & authorized
• NI hasn’t been altered
• no defenses/claims can be asserted against transferor
• no knowledge of insolvency

Question 3

Presentment warranties

Answer 3

• W entitled to enforce NI (no unauthenticated/missing indorsements)
• draft not altered
• no knowledge of drawer’s signature being unauthorize

Question 4

SOL for

Answer 4

Drafts

• 3 years from date of dishonor or 10 years from date of draft, whichever is earlier
• certified - if presenting, 3 years after demand for payment

Notes

• payable at defniite time - 6 years after due date
• on demand- 6 years after deman for payment

Question 5

Real defenses`

Answer 5

1. infancy (void and voidable)
2. incapacity (void)
3. duress (void)
4. illegality (void)
5. fraud - fraud in factum, fraud in inducement (personal defense only)
6. bankruptcy
7. alternation/forgery
8. SOL

Question 6

Negotiabilty

Answer 6

1. in writing, signed by maker/drawer
2. unconditional promise or order to pay
3. fixed principal amount
4. payable to order/bearer
5. on demand or at definite time
6. no additional conditions, undertakings, agreements

Question 7

Shelter rule

Answer 7

Rights follow the instrument - Transferee gets whatever rights transferor had

Exception - transferee who gets instrument by fraud can’t be HDC (but if transferee doesn’t know and transfers to 3P who does know, 3P still gets transferee’s rights)

Question 8

Types of indorsements

Answer 8

Special - transfer of to specific person

blank - not to specific person

qualified - limits liability on instrument (ex: “without recourse”)

restrictive - limit what holder can do w/ instrument (“for deposit only”, can’t be performance based etc.)

Question 9

Notes - parties

Answer 9

Maker - promisor

Payee - promisee

Question 10

Unauthorized signatures

Answer 10

• Imposters (drawer gets duped) - enforceable if indorsed by any person In payee’s name
• fictitious/unintended payees (good employees go bad) - Same as above, corp is liable as it was in best position to prevent
• employer’s liability for fraudulent employee - employer remains responsible
• benefited parties - people receiving unauthorized NIs, usually GF purchasers for value. Must use ordinary care in taking NI

Question 11

Notes - parties

Answer 11

Drawer - person ordering payment

drawee - person being ordered to pay

Payee - person getting paid