Reg6

Question 1

What is a note?

Answer 1

A two-party commerical paper (and hence not a check b/c the bank would be a third party)

Question 2

What is a draft?

Answer 2

A three-party commerical paper (like a check)

Question 3

Whare are the requriments for an instrment to be negotiable?

Answer 3

1.) must be in writing 2.) signed by the maker (for notes) or drawer (for drafts) 3.) contant an unconditional promise (for notes) or order (for drafs) to pay 4.) be for a fixed amount of money (and only money) 5.) be payable on demand or at a definite time 6.) be payabe to order or to bearer, with the execptions of checks 7.) contain no addional undertaking or instruction (in order to get the money)

Question 4

What are the three reuqmernts for taking a commerical paper in due course? (aka that must be met to be an HDC)

Answer 4

1.) taken for value 2.) in good faith 3.) without notice of any defenses ro claims of ownership of the instrument

Question 5

A HDC (holder in due course) has protection from what type of defense?

Answer 5

Personal defenses

Question 6

What are the real defenses?

Answer 6

FAIDS *2 F-Fraud in the execution F-Forgery of signature A-Adjusuciated insane A-materal alteration fo the instrument I-Infancy I-illegailty (such as a check for muder hire) D-Duress D-Discharge in bankruptcy S-Suretyship defneses S-Stateue of limitaions has run out

Question 7

What are the five types of transfer warranties an endorser is liabile for when they sign a note or draft?

Answer 7

1.) has good title 2.) alll signatures are genuine 3.) instrument has not been materially altered 4.) no deense of any party is good against the transferor 5.) the ransferor ahs no knowedlge of any insolvence problems

Question 8

What is the difference between a surety and a guarantor?

Answer 8

A surety is directly liable, which means they can be sued for the money without having to do anything with the main creditor. A guarantor though is only liabiale after all remedies have failed