Negotiable Instruments Flashcards
Subject: Negotiable Instruments
What are the requirements for an instrument to be negotiable?
Subject: Negotiable Instruments Requirements of Negotiability 1. It is written and signed. 2. It contains an unconditional promise to pay a fixed amount in money. 3. Payable at a definite time. 4. It is payable to bearer
Subject: Negotiable Instruments
All negotiable instruments are required to be payable to order or bearer. True or False?
Subject: Negotiable Instruments
False- All negotiable instruments are required to be payable to order or bearer WITH THE EXCEPTION OF CHECKS.
Subject: Negotiable Instruments
Define a Restrictive Endorsement
Subject: Negotiable Instruments
A restrictive endorsement is an endorsement with a restriction. For example “For Deposit Only”
Subject: Negotiable Instruments
Define a Blank Endorsement
Subject: Negotiable Instruments
A blank endorsement is one that does not specify any endorsee. Example: only a signature
Subject: Negotiable Instruments
Define a Qualified Endorsement
Subject: Negotiable Instruments
A qualified endorsement is one which the endorser disclaims any liability to pay the holder and/ or subsequent endorser for the instrument if it is later dishonored. For example “without recourse”
Subject: Negotiable Instruments
Define a Special Endorsement
Subject: Negotiable Instruments
A special endorsement is when the endorser indicates a specific person who needs to subsequently endorse (sign) the negotiable instrument. For example, “Pay to…signed XXX.
Subject: Negotiable Instruments
What is the difference between negotiating bearer paper and negotiating order paper?
Subject: Negotiable Instruments
Negotiating bearer paper only requires delivery.
Negotiating order paper requires both delivery and endorsement by the transferor.
Subject: Negotiable Instruments
What is the difference between bearer paper and order paper?
Subject: Negotiable Instruments
Bearer paper- Endorses instrument in blank. No need to endorse it to negotiate it to the next party.
Order paper- Has non- blank endorsement. Requires both delivery and endorsement by the transferor
Subject: Negotiable Instruments
Describe an endorsement that is Special and Restrictive
Subject: Negotiable Instruments
Special and Restrictive- “Pay to” …“If he completes”
Subject: Negotiable Instruments
Describe an endorsement that is Special and Qualified
Subject: Negotiable Instruments
Special and Qualified- “Pay to” …“w/o recourse”
Subject: Negotiable Instruments
Describe an endorsement that is Restrictive and Blank
Subject: Negotiable Instruments
Restrictive and Blank- “For Deposit only” …signed in blank
Subject: Negotiable Instruments
Describe a Special Endorsement
Subject: Negotiable Instruments
Special Endorsement- “Pay to”…signed
Subject: Negotiable Instruments
Describe Real Defenses for Negotiable Instruments.
Subject: Negotiable Instruments Real Defenses 1. Bankruptcy 2. Material Alteration of Instrument 3. Duress
Subject: Negotiable Instruments
Describe Personal Defenses for Negotiable Instruments.
Subject: Negotiable Instruments Personal Defenses 1. Unauthorized Completion 2. Breach of Contract 3. Breach of Warranty 4. Fraud in the Inducement 5. Lack of Consideration
