Essay Writing Tips

Question 1

Always start with: To be negotiable, an instrument must be:

Answer 1

(i) a WRITING, SIGNED by the maker/drawer,
(ii) containing an UNCONDITIONAL promise or order, (iii) to pay a FIXED amount of money,
(iv) to ORDER or BEARER,
(v) payable ON DEMAND or at a DEFINITE TIME, and
(vi) without stating any additional undertaking or instruction.

Question 2

A person can become a holder through

Answer 2

negotiation

Question 3

If the instrument is payable to ______, in addition to the ________ of possession, the instrument must be ________ by the holder in order to be _________.

Answer 3

order ; transfer ; indorsed ; negotiated

Question 4

Consequence of transfer without proper negotiation to the transferee

Answer 4

transferee cannot be a holder and cannot enforce the instrument.

Question 5

A person must be a ________ in order to enforce a negotiable instrument. A person can become a holder through _________. Negotiation is the ______ by a person other than the _______ or ______ to any other person who, as a consequence, becomes the holder of the instrument. If the instrument is payable to ______, in addition to the ______ of possession, the instrument must be _______ by the holder in order to be _______. The __________ must be authorized and valid.

Answer 5

holder ; negotiation ; delivery ; maker ; drawer ; order ; transfer ; indorsed ; negotiated ; indorsement

Question 6

A person must be a _________ in order to enforce a negotiable instrument.

Answer 6

holder

Question 7

A person can become a holder through __________.

Answer 7

negotation

Question 8

Negotiation is the ________ by a person other than the _______ or ________ to any other person who, as a consequence, becomes the holder of the instrument.

Answer 8

delivery ; maker ; drawer

Question 9

If the instrument is payable to _______ in addition to the ________ of possession, the instrument must be ________ by the holder in order to be _________.

Answer 9

order ; transfer ; indorsed ; negotiated.

Question 10

The ___________ must be authorized to be valid.

Answer 10

indorsement

Question 11

A holder may be prevented from recovering payment depending on whether the holder is a ___________ and whether the ________ is asserting a _______ or _______ __________.

Answer 11

Holder in Due Course (HDC) ; obligor ; real ; personal defense.

Question 12

To become the HDC of a negotiable instrument, one must :

Answer 12

(i) TAKE the instrument as a HOLDER,
(ii) for VALUE,
(iii) in GOOD FAITH, and
(iv) WITHOUT NOTICE of certain INFIRMITIES of the instrument or the transaction out of which the instrument arose.

Question 13

Good faith amounts to ______-__-______ and the observance of reasonable _________ _________ of ____ ________.

Answer 13

honesty-in-fact ; commercial standards ; fair dealings

Question 14

Honesty-in-fact is judged by a ________ standard as to what the holder actually believed. Reasonable commercial standards of fair dealing are judged by an ________ standard as to whether the holder was attempting to take advantage of the ______ or otherwise acting unfairly.

Answer 14

subjective ; objective ; obligor

Question 15

If the holder is an ______, the _______ can assert only the so-called _____ _______ against enforcement of the instrument.

Answer 15

HDC ; obligor ; real defenses

Question 16

Fraud is considered a real defense if it is

Answer 16

fraud in the factum, not fraud in the inducement.

Question 17

Fraud in the factum vs fraud in the inducement

Answer 17

Factum: occurs when the obligor is induced to sign the instrument without knowledge or reasonably opportunity to obtain knowledge of the instrument’s character or essential terms.
Inducement: occurs when the obligor is aware of the nature of the instrument, but has been induced by a false statement concerning a material fact.

Question 18

When conflicting or contradictory terms exist within an instrument, ___________ terms take precedence over _____________ terms, typewritten terms over _______ terms, and _______ over __________.

Answer 18

handwritten ; typewritten ; printed ; words ; numbers.