R6: Comm Paper, Sec Trans, & Suretyship,

Question 1

Commercial paper types

Answer 1

Note/CD- 2 ppl

Check/Draft- 3 ppl

Question 2

Negotiable Instrument

Answer 2

• written
• signed by maker/drawer
• unconditional promise to pay
• fixed amount
• magic words (except for checks)
• no addtl instructions
• on demand or definite time - must know latest date of pmt

Question 3

authorized promises (addtl promises not ok except these)

Answer 3

auth to maintain collateral
auth to dispose of collateral
waive benefit of law (jury trial)

Question 4

HDC requirements

Answer 4

• negotiable instrument
• took for VALUE (no excutory promises)
• in good faith
• w/o notice of claims (overdue)

Question 5

types of endorsements

Answer 5

blank/special (for whom)
restrictive/unrestrictive (deposit only)
qualif/unqualif ( w/o recourse- cntc liab)

Question 6

Shelter doctrine

Answer 6

if got from HDC you become HDC

even if not give value or if know of claims

Question 7

Real Defenses (FAIDS)

Answer 7

Forgery
Fraud in execution
Adjudicated INSANITY
Alteration of check
Infancy
Illegality
Duress- that makes void, extreme
Discharge in bankruptcy
Surety defenses
Stat of limits - 3 yrs from acceptance, 6yrs from demand/duedate

Question 8

Primarily liable people on commercial papers

Answer 8

makers and drawees
drawees if accepted/signed/certified
—releases all others

Question 9

secondarily liable people on comm papers

Answer 9

Drawer- second if bank not pay
endorser- if not endorse liab to next transferONLY
—if endorsed liab to ALL
—if w/o recourse- no contract liab just WTY LIAB

Question 10

warranty liabs made by endorser

Answer 10

• entitled to enforce
• signatures are real
• not altered
• no defenses vs. transferor
• no knowl of insolvency

Question 11

Discharging- release from obligation

Answer 11

• payment
• destroying instrument
• collateral released/impaired
• delay in presenting/ no notice of dishonor
• acc/certif by bank

Question 12

PMSI

Answer 12

bought item from creditor OR

creditor gave$ to buy item

Question 13

attachment reqs (vs. debtor)

Answer 13

• agreement
• —authenticated record OR possesion
• value given by creditor (loan)
• debtor has rights in collat (have it)

Question 14

Perfection (vs other creditors)

Answer 14

• filing financing statement
• possessing
• control - secs- tell ppl to pay you instead
• autom perfection - ONLY consumer goods
• temporary - 20 day window for proceeds from orig collat and 4mths after moving interstate

Question 15

Priorities

Answer 15

buyer in ord course
PMSI
perf sec int - first to file or perfect
inperf sec int
debtor

Question 16

PMSI inventory

Answer 16

perfection BEFORE debtor possesess & give notice to other BEFORE debtor possesses

Question 17

PMSI Equip

Answer 17

have 20 days AFTER debtor possession to perfect. if do it w/in it applies back to when debtor possessed

Question 18

Jud lien vs. Sec int

Answer 18

jud lien priority if attached before sec int perfected

sec int if perfected before jud lien attached

Question 19

trustee in bankruptcy priority

Answer 19

prior sec ints priority

subsequent sec ints NOT

Question 20

Default Rights

Answer 20

• take possession
• sale - must give notice & wipes all sec ints
• proceeds from sale - first to pay exps, next creds, next debtor

Question 21

retentiion of collateral (consumer vs. nonconsumer)

Answer 21

consumers- take it for full pmt

NONconsumers- take it and can recover diff from debtor

Question 22

60% rule with consumers

Answer 22

if have paid 60% of balance you MUST sell

Question 23

surety vs guarantor

Answer 23

surety just as liable. can recover from u instead

guarantor- has to use all other options first

Question 24

compen vs noncompen surety

Answer 24

compen- only MAT change to risk releases him

NONcompen- ANY change to risk releases him

Question 25

Surety rights vs. creditor

Answer 25

NO right to compel to use collat or go after debtor

no right to be notified of default

Question 26

Surety rights vs. Debtor

Answer 26

Exoneration- BEFOREpmt- sue to go after debtor
Subrogation- AFTER- get creditors rghts
Reimbursement- AFTER- get $ from debtor

Question 27

Surety rights vs. Cosureties

Answer 27

Exoneration- BEFORE- go after other cosureties so they pay their part
Contrib- AFTER- get their share
— ONLY SOLVENT ones count in prorata calc

Question 28

Surety Defenses - if creditor is bad

Answer 28

Defrauded princ
Duress on princ
illegal
discharge of obligation
---tender of pmt 
---release of debtor
----covenant not to sue
-------release of debtor w/ reserved rights vs. surety
incapacity/bktpcy

Question 29

Release of Cosuety

Answer 29

surety released from amount that cosurety couldve contributed

Question 30

creditors composition vs. assignment of bens

Answer 30

composition- agmt bet creditors to take LESS for satisfaction of debt
assignment- give prop to trustee, he sells it and pays debts

Question 31

Judlien vs. garnishments

Answer 31

Jud lien- used when asset in debtor’s hands

garnishments- 3rd pty’s hands

Question 32

Fraud conveyances- characs:

Answer 32

• made to insider
• kept possesion/control
• NOT disclosed
• substantially ALL assets
• value rec’d NOT reas
• became insolvent afterwards