CPCU 530 Ch. 4 Flashcards
A collection of laws that help prevent parties from becoming involved in fraudulently formed contracts
Statues of fraud
The chance of financial loss
Risk
A shipping condition under which the buyer pays when the goods are delivered and has no right to inspect the goods as a condition to acceptance and payments
COD (Collect on delivery)
An implied warranty that a product is fit for the ordinary purpose for which it is used
Implied warranty of merchantability
An implied warranty that a product is fit for a particular purpose; applies if the seller knows about the buyer’s purpose for the product
Implied warranty of fitness for a particular purpose
An implied promise in a contract for the sale of goods that the seller has legal ownership of goods and has no knowledgeable of any security interest or other lien on the goods other than those disclosed to the buyer
Implied warranty of title
The absolute obligation to pay a negotiable instrument according to its terms
Primary liability
The obligation to pay a negotiable instrument only if someone else refuses to pay or accept the instrument
Secondary liability
A claim to an instrument by any person and any defense that would be effective in a simple contract transaction
Personal defense
A defense of an obligor of a negotiable instrument that may be asserted even against a holder in due course
Real defense
A legal document that provides title to the goods in storage and assures deliver to the holder of the receipt
Warehouse receipt
A document acknowledging receipt of goods from the shipper, given by the carrier, which includes the terms of the contract of carriage for goods
Bill of lading
A person or organization in the business of transporting property to others
Carrier
The temporary transfer of property’s custody
Bailment
The owner of the personal property in a bailment
Bailor
The party temporarily processing the personal property in a bailment
Bailee
The party who is shipping goods
Consignor
The person or organization that receives property being transported by a carrier
Consignee
Cash, or near cash assets, that a principal pledges to secure credit, a loan, or other obligations
Collateral
An interest in property (real or personal) that allows the property to be sold on default to satisfy the debt for which the security interest was given
Security interest
A security device by which a borrower guarantees payments by delivering collateral to the lender to hold as security for the debt
Pledge
Tangible, movable personal property
Chattel
A security arrangement that has been filed with the appropriate court to provide the surety a priority interest over others who may also have security interests in the property
Perfected security interest
Knowledge that a person is assumed by law to have because that knowledge could be gained by reasonable observation or inspection
Constructive notice
The person to whom a negotiable instrument has been issued or endorsed and who possesses it for value, in good faith and without notice that it may not be valid, can be claimed by another, is overdue, or was previously dishonored
Holder in due course
A creditor’s legal right or interest in another’s property, usually lasting until satisfaction of the specific debt or duty that the lien secures
Lien
The body of federal law that allows debtors who are unable to pay their creditors to divide their assets among their creditors to discharge the debts
Bankruptcy law
