Review Flashcards
5 Types of Endorsements (Indorsements)
Blank
For deposit only (restrictive)
Special
Qualified
Combination
Rules/Requirements for HIDC
Must be a holder
must take for value
must be in good faith
must take without notice
Results of being a HIDC
eliminate personal defenses
cannot be rid of real defenses, unless holding cash
Shelter Principle
extends the benefits of HIDC status and designed to aid the HIDC in readily disposing of the instrument
Signature Liability
derived from a person’s signature on instrument
Warranty Liability
implied when the person presents instrument for negotiation
Accommodation Indorsers
If the party signs on behalf of a payee or other holder (usually to make the instrument more marketable), he is an accommodation indorser.
As an indorser, secondarily liable.
PMSI (Purchase Money Security Interest)
- The creditor that finances the purchase can get a super priority
- This is by consent and achieved by getting a security agreement
filing the F/S within 20 days. Otherwise, you are just secured and perfected. - There is no special documentation required to get a PMSI
5 Benefits of Bankruptcy
centralized litigation
stay on all debts (automatic)
discharge of applicable debt
exempt of some assets sale
uniform process
Chapter 7 Bankruptcy
Liquidation
Chapter 9 Bankruptcy
government
Chapter 11 Bankruptcy
reorganization
Chapter 12 Bankruptcy
Farmers
Chapter 13 Bankruptcy
Individual/Personal
Vicarious Liability in Relatinships
Parent-child
employer-employee
owner-pet
Parent-Child tort
parent is liable
employer-employee tort
liable is based on whether tort committed within scope of employment
owner-pet tort
owner is liable
Property that are exempt in Bankruptcy
Partial (homestead, car, tools of trade, jewelry, household goods)
Total (health aids, life insurance, support payments, retirement accounts)
Bankruptcy Basket - Fraud
Can go back up to 2 years to recover funds
Bankruptcy Basket - Preferential
can go back up to 90 days to recover funds
Order of priority in bankruptcy
Lien
Secured+Perfected
Secured+Unperfected
Unsecured+Unperfected
Date limit on PMSI
less than 20 days
Date limit on Financing Statement
5 years
Retail per UCC-9
auto-perfected if written SA
Pawns per UCC-9
pledge
Math per UCC-9
[SA + Debtor Ownership + Creditor Value] + Public Notice = Secured and Perfected (S+P)
Traditional Method of Collection
suit
liens
attachment
garishment
1st filers get dibs
Collection methods for creditors
Mortgages
UCC-9
Guaranty
Surety
Collection Process of NI
Drawer
Payee
Depository & Collecting Bank
Intermediary & Collecting Bank
Drawee & Payor Bank
Endorsement of NI
blank
restrictive
special
qualified
combo
Universal (real) defenses
Forgery
Fraud in execution
Material alteration
discharge in bankruptcy
minority (if voidable)
illegality, mental capacity
Personal defenses
Breach of contract
Failed consideration
Wrongful completion
Duplicate payment
Fraud in the inducement
Formula of NI
Cash>NI & HIDC>NI not HIDC>Written>Verbal(IOU)
Basic Judgment Rule
Reasonably Prudent
Negligent
Gross Negligent
Scienter
Mens Rea (Criminal)
Securities Law
if exempt then Blue Sky Laws
if not exempt then Act 1933 and 1934
1933 Act
IPO
1934 Act
Secondary Market
Authorized & Disclosed
principal is liable and will pay
Authorized & Undisclosed
principal and agent both liable, end of day falls on principal
Not Authorized & Agency by estoppel
principal and agent can be sued, at end of day agent will pay
Not Authorized & not apparent
agent is liable, principal has the option to ratify
Non-Dischargeable debts
INTENTIONAL torts
taxes/fines
student loans (was formerly able)
fraud
support payments (on other side cannot avoid if banktrupt)
DUI
criminal acts
Collection Method via Surety
Primary , either verbal/written
Collection Method via Guarator
Secondary, must be written
Transfer Warranties (5)
no forgeries
no material alterations
no insolvency (at the time)
no claims/defenses
party is entitled to get paid
Criteria for HIDC for NI
negotiable instrument of value
good faith
no knowledge of problems
Requirement of Negotiable Instruments
unconditional promise to pay
payable on demand or at specific time
sum certain
in writing
signed
