General

Question 1

Approach

Answer 1

1) Identify TYPE of paper
2) Identify PARTIES
3) Determine if INSTRUMENT is NEGOTIABLE
4) Determine if INSTRUMENT was PROPERLY negotiated
5) Determine if TRANSFEREE is a HOLDER in DUE COURSE (HDC)
6) Determine P CAUSE of ACTION such as contract, warrant, tort, or no properly payable.
7) Determine D’s DEFENSES
8) If D is held liable, may D PASS LIABILITY on to another party.

Question 2

Alteration

Not properly Payable

Answer 2

General Rule:
* An altered check is not properly payable, and bank needs to recredit.

Except:
1) Negligence

2) Bank Statement Rule

Question 3

Alteration

Effect on Holder in Due Course

Answer 3

Change in Obligation
* HDC may enforce the original amount

Unauthorized Completion
* HDC may enforce full

Question 4

Alteration

Effect on NON holder in Due Course

Answer 4

Fraudulent made by holder = total dishonor of obligor

Non fraudulent made = obligor liable under original contact.