Review

Question 1

5 Types of Endorsements (Indorsements)

Answer 1

Blank
For deposit only (restrictive)
Special
Qualified
Combination

Question 2

Rules/Requirements for HIDC

Answer 2

Must be a holder
must take for value
must be in good faith
must take without notice

Question 3

Results of being a HIDC

Answer 3

eliminate personal defenses
cannot be rid of real defenses, unless holding cash

Question 4

Shelter Principle

Answer 4

extends the benefits of HIDC status and designed to aid the HIDC in readily disposing of the instrument

Question 5

Signature Liability

Answer 5

derived from a person’s signature on instrument

Question 6

Warranty Liability

Answer 6

implied when the person presents instrument for negotiation

Question 7

Accommodation Indorsers

Answer 7

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.

Question 8

PMSI (Purchase Money Security Interest)

Answer 8

• 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

Question 9

5 Benefits of Bankruptcy

Answer 9

centralized litigation
stay on all debts (automatic)
discharge of applicable debt
exempt of some assets sale
uniform process

Question 10

Chapter 7 Bankruptcy

Answer 10

Liquidation

Question 11

Chapter 9 Bankruptcy

Answer 11

government

Question 12

Chapter 11 Bankruptcy

Answer 12

reorganization

Question 13

Chapter 12 Bankruptcy

Answer 13

Farmers

Question 14

Chapter 13 Bankruptcy

Answer 14

Individual/Personal

Question 15

Vicarious Liability in Relatinships

Answer 15

Parent-child
employer-employee
owner-pet

Question 16

Parent-Child tort

Answer 16

parent is liable

Question 17

employer-employee tort

Answer 17

liable is based on whether tort committed within scope of employment

Question 18

owner-pet tort

Answer 18

owner is liable

Question 19

Property that are exempt in Bankruptcy

Answer 19

Partial (homestead, car, tools of trade, jewelry, household goods)

Total (health aids, life insurance, support payments, retirement accounts)

Question 20

Bankruptcy Basket - Fraud

Answer 20

Can go back up to 2 years to recover funds

Question 21

Bankruptcy Basket - Preferential

Answer 21

can go back up to 90 days to recover funds

Question 22

Order of priority in bankruptcy

Answer 22

Lien
Secured+Perfected
Secured+Unperfected
Unsecured+Unperfected

Question 23

Date limit on PMSI

Answer 23

less than 20 days

Question 24

Date limit on Financing Statement

Answer 24

5 years

Question 25

Retail per UCC-9

Answer 25

auto-perfected if written SA

Question 26

Pawns per UCC-9

Answer 26

pledge

Question 27

Math per UCC-9

Answer 27

[SA + Debtor Ownership + Creditor Value] + Public Notice = Secured and Perfected (S+P)

Question 28

Traditional Method of Collection

Answer 28

suit
liens
attachment
garishment

1st filers get dibs

Question 29

Collection methods for creditors

Answer 29

Mortgages
UCC-9
Guaranty
Surety

Question 30

Collection Process of NI

Answer 30

Drawer
Payee
Depository & Collecting Bank
Intermediary & Collecting Bank
Drawee & Payor Bank

Question 31

Endorsement of NI

Answer 31

blank

restrictive

special

qualified

combo

Question 32

Universal (real) defenses

Answer 32

Forgery
Fraud in execution
Material alteration
discharge in bankruptcy
minority (if voidable)
illegality, mental capacity

Question 33

Personal defenses

Answer 33

Breach of contract
Failed consideration
Wrongful completion
Duplicate payment
Fraud in the inducement

Question 34

Formula of NI

Answer 34

Cash>NI & HIDC>NI not HIDC>Written>Verbal(IOU)

Question 35

Basic Judgment Rule

Answer 35

Reasonably Prudent
Negligent
Gross Negligent
Scienter
Mens Rea (Criminal)

Question 36

Securities Law

Answer 36

if exempt then Blue Sky Laws
if not exempt then Act 1933 and 1934

Question 37

1933 Act

Answer 37

IPO

Question 38

1934 Act

Answer 38

Secondary Market

Question 39

Authorized & Disclosed

Answer 39

principal is liable and will pay

Question 40

Authorized & Undisclosed

Answer 40

principal and agent both liable, end of day falls on principal

Question 41

Not Authorized & Agency by estoppel

Answer 41

principal and agent can be sued, at end of day agent will pay

Question 42

Not Authorized & not apparent

Answer 42

agent is liable, principal has the option to ratify

Question 43

Non-Dischargeable debts

Answer 43

INTENTIONAL torts
taxes/fines
student loans (was formerly able)
fraud
support payments (on other side cannot avoid if banktrupt)
DUI
criminal acts

Question 44

Collection Method via Surety

Answer 44

Primary , either verbal/written

Question 45

Collection Method via Guarator

Answer 45

Secondary, must be written

Question 46

Transfer Warranties (5)

Answer 46

no forgeries
no material alterations
no insolvency (at the time)
no claims/defenses
party is entitled to get paid

Question 47

Criteria for HIDC for NI

Answer 47

negotiable instrument of value

good faith

no knowledge of problems

Question 48

Requirement of Negotiable Instruments

Answer 48

unconditional promise to pay

payable on demand or at specific time

sum certain

in writing

signed