REG - 14

Question 1

HDC takes a promissory note free from what type of defenses?

Answer 1

Personal, NOT universal

Question 2

Universal Defenses include

Answer 2

Infancy
Forgery
Fraud in the Execution

Question 3

When do letters of credit expire?

Answer 3

One year after the date of issue; if the stated duration is “perpetual” the letter expires 5 years after its date or date of issue

Question 4

Which letters of credit are revocable and which are irrevocable?

Answer 4

Domestic: revocable
International: irrevocable unless otherwise stated or agreed

Question 5

Words of negotiability

Answer 5

Order or bearer

Question 6

Due Negotiation

Answer 6

• Holder
• Takes in good faith
• In ordinary course of business
• Pays value (no pre-existing (antecedent) debt)
• No notice of defense

Question 7

Common carriers have absolute or strict liability EXCEPT:

Answer 7

• acts of god
• acts of public enemy
• defective packaging by shipper
• inherent delicacy of goods (easily spoiled food)

Question 8

Can a thief ever pass title?

Answer 8

No

Question 9

For a security interest to attach, the following must be present:

Answer 9

• Underlying debt/obligation
• either a security agreement or possession of the collateral by the creditor; AND
• debtor must have interest in the property

Question 10

Is filing of a security agreement necessary to create an interest under the Secured Transactions Article of the UCC?

Answer 10

No. It is only necessary to perfect an interest that has already been created.