Term
|
Definition
|
|
Term
|
Definition
transfer of duties (what one must perform) opposite of assignment |
|
|
Term
obligors cannot prevent assignments, except: |
|
Definition
1) contract states otherwise 2) personal contract between parties 3) substantial change in performance |
|
|
Term
|
Definition
1. breach of contract 2. contract was illegal 3. contract with a minor (voidable) 4. statute of frauds 5. duress or threats 6. discharge 7. insanity 8. too intoxicated 9. lack of agreement 10. unconscionability |
|
|
Term
| Contract Defenses (11-20) |
|
Definition
11. mutual mistake of fact 12. misrepresentation - innocent 13. fraud - intentional, fraud in the inducement 14. statute of limitations 15. bankruptcy 16. concealment 17. undue influence 18. fraud in the execution 19. lack of consideration 20. unilateral mistake of fact |
|
|
Term
| voidable contract - definition |
|
Definition
| sitting on the fence. in order to get out of contract you have to disaffirm or avoid the contract. |
|
|
Term
| Voidable Contracts (1-12) |
|
Definition
1. minor (ages 7-17) 2. intoxication 3. insanity 4. fraud in the inducement 5. undue influence 6. mutual mistake of fact 7. duress - mild 8. misrepresentation (innocent) 9. illegality 10. unconscionability 11. concealment 12. unilateral mistake of fact |
|
|
Term
|
Definition
Contract doesn't exist 1. minors under 7 years of age 2. illegality 3. insanity - declared by courts 4. duress - extreme 5. unconscionability 6. fraud in the execution |
|
|
Term
|
Definition
All void contracts Statute of limitations Statute of frauds Bankruptcy |
|
|
Term
| requirements for negotiability |
|
Definition
two parties (maker/drawer, payee) sum certain in money maker is unconditionally promising to pay payable at a definite time |
|
|
Term
|
Definition
| payable at a specific time - only instrument that will be "accepted" |
|
|
Term
|
Definition
| any instrument without a specific date. can be presented "on demand" |
|
|
Term
|
Definition
|
|
Term
|
Definition
"order" "bearer" "pay to the order of" must be on face of instrument |
|
|
Term
|
Definition
|
|
Term
|
Definition
|
|
Term
|
Definition
|
|
Term
|
Definition
3 parties: drawer, drawee, payee.
all checks are drafts, but not all drafts are checks. |
|
|
Term
|
Definition
| draft where drawee is drawer's bank. |
|
|
Term
|
Definition
|
|
Term
|
Definition
|
|
Term
|
Definition
|
|
Term
|
Definition
|
|
Term
|
Definition
|
|
Term
|
Definition
|
|
Term
|
Definition
|
|
Term
|
Definition
|
|
Term
|
Definition
|
|
Term
| blank unqualified indorser |
|
Definition
just indorsement
secondary liability |
|
|
Term
|
Definition
"without recourse"
removes secondary liability |
|
|
Term
| instruments are dishonored when |
|
Definition
| there is a refusal to pay, or a refusal to accept. triggers secondary liability |
|
|
Term
|
Definition
| triggered on dishonor. unqualified indorsers, drawers |
|
|
Term
|
Definition
primary liability
accepts a time draft |
|
|
Term
|
Definition
| maker, acceptor, guarantor for payment |
|
|
Term
|
Definition
|
|
Term
|
Definition
1) person
2) possession of a negotiable instrument
3) drawn, issued or indorsed to that person or to that person's order or to bearer or in blank. |
|
|
Term
|
Definition
| time draft with only two parties. works for both buyer and seller, buyer gets money now, seller pays later. |
|
|
Term
|
Definition
|
|
Term
|
Definition
ex. payable on or before 10/10/08
does not affect negotiability |
|
|
Term
| acceleration by the holder |
|
Definition
| on default, payment in full is due |
|
|
Term
|
Definition
innocent purchaser of a negotiable instrument
1. holder
2. gives value
3. without notice
4. in good faith
does not have absolute immunity, but is immune from most 20 defenses |
|
|
Term
|
Definition
| = consideration - executory promises |
|
|
Term
|
Definition
| value that hasn't been performed yet. ex. promising to wash car on sunday. |
|
|
Term
|
Definition
| present but not future, agreed consideration performed, not executory promise, not a gift, not an inheritance, antecedent (prior) claim, give a negotiable instrument, making an irrevocable commitment to a third party |
|
|
Term
|
Definition
"honesty in fact" at time you took instrument, you took it honestly.
a) duty to inquire - cannot just take it
b) all surrounding circumstances
c) grossly inadequate consideration
d) close-connectedness test - who are these people? |
|
|
Term
|
Definition
knowing or having reason to know.
1) overdue
2) dishonored
3) defenses
4) claims
if you take a negotiable instrument knowing one of the above, you will not be a HDC |
|
|
Term
|
Definition
| on a check, if it is older than 30 days, holder will not be a HDC |
|
|
Term
|
Definition
| holder through a HDC. if holder before you was a HDC, then you are protected, only when suing a maker/drawer. |
|
|
Term
|
Definition
| 0 liability. party in possession of a bearer instrument. |
|
|
Term
| accommodation party definition |
|
Definition
| someone who adds their name to the instrument and gives value. either accommodation maker or indorser |
|
|
Term
|
Definition
1. co-maker
2. surety
3. guarantor for collection |
|
|
Term
|
Definition
| primary liability, joint and several liability if there's a fault. |
|
|
Term
|
Definition
| if B is a surety, they are saying I will pay the debtor's debt if A defaults. can sue A for money sent. |
|
|
Term
|
Definition
| i will pay the debtors debt if the debtor faults and if the creditor is unable to collect from the debtor. |
|
|
Term
|
Definition
| "I hereby guarantee payment" signed by guarantor. Primary liability. |
|
|
Term
| 3 parties with primary liability |
|
Definition
| guarantor for payment, maker on a note, acceptor on time draft |
|
|
Term
|
Definition
| identify the courts (state trial court), recreate the instrument, chain of possession, chain of title, identify the parties and liabilities, identify the issues, reasoning process |
|
|
Term
|
Definition
| not a HDC, liability of assignee |
|
|
Term
|
Definition
|
|
Term
|
Definition
|
|
Term
|
Definition
| issuer, payee, transferee, drawee, presentee, issuee, indorsee, bearer |
|
|
Term
|
Definition
| breach of contract, fraud in the inducement. |
|
|
Term
| mere holder v. maker/drawer with personal defense |
|
Definition
|
|
Term
| HDC v. maker/drawer with personal defense |
|
Definition
|
|
Term
|
Definition
| aka universal defenses, all holders (including HDCs) lose. |
|
|
Term
|
Definition
| blank, special "pay to claire", qualified "without recourse" eliminates 2 liab., restrictive |
|
|
Term
|
Definition
a. pay to Joe, only = special restrictive (no legal meaning)
b. For Deposit Only, Pay Any Bank or Banker, For Collection Only - only for depositary bank.
c. conditional indorsement - ex. pay to Sam if Bengals win. |
|
|
Term
|
Definition
1. Breach of contract
2. fraud in the inducement
3. illegality if contract is voidable
4. non-delivery of an instrument
5. unauthorized completion (blank amount)
6. prior payment
7. incapacity
8. Duress (mild)
9. all voidable defenses are personal defenses except minority. |
|
|
Term
|
Definition
1. forgery (forged signature)
2. unauthorized signing
3. fraud in the execution
4. material alteration (partial real defense)
5. bankruptcy
6. illegality - when contract is void
7. extreme incapacity
8. minority
9. all void defenses are real
10. lack of title (forged indorsement of order paper) |
|
|
Term
| negligence with real defense |
|
Definition
| turns real defense into personal defense and can be beat by HDC |
|
|
Term
|
Definition
| anyone who transfer and receives consideration warrants to his/her transferee and if the transfer is by indorsement makes warranties to any subsequent holder who takes the holder in good faith. 5 warranties. |
|
|
Term
|
Definition
| transferor has good title |
|
|
Term
|
Definition
| all the signatures are genuine or authorized |
|
|
Term
|
Definition
|
|
Term
|
Definition
| no defense of any party is good against them |
|
|
Term
|
Definition
| no knowledge of insolvency proceedings (bankruptcy) |
|
|
Term
|
Definition
| any person who obtains payment or acceptance or any prior transferor warrants to a person who in good faith pays or accepts |
|
|
Term
|
Definition
| the person has good title |
|
|
Term
|
Definition
| no knowledge of forged signautre |
|
|
Term
|
Definition
|
|
Term
| banks should recognize three things |
|
Definition
| forged signatured, forged indorsement, material alteration |
|
|
Term
|
Definition
|
|
Term
| presentment warranties are made to: |
|
Definition
|
|
Term
| defense to presentment warranties |
|
Definition
| HDC aigf - innocent at all times |
|
|
Term
| HDC aigf does not work when: |
|
Definition
| plaintiff is a drawee bank or presentment warranty #1 |
|
|
Term
| thief of bearer paper's defense |
|
Definition
| nondelivery of a negotiable instrument |
|
|
Term
| drawee bank good condition if: |
|
Definition
| pay over a forged indorsement or material alteration |
|
|
Term
| drawee bank in bad condition if: |
|
Definition
| pay over a forged signature |
|
|
Term
| only person who can sue drawee bank |
|
Definition
|
|
Term
| most powerful of transfer warranties |
|
Definition
| tw#4: saying that no defense is good against them = holder can sue all other parties and win |
|
|
Term
|
Definition
1. holder vs. maker/drawer
2. transferee v. prior transferor
3. person in good faith who pays or accepts v. a person who botains payment and any prior transferor
4. holder v. drawee
5. drawer bank v. drawer |
|
|
Term
|
Definition
| only time you use real/personal defenses. whether or not HDC is important. |
|
|
Term
| transferee v. prior transferor |
|
Definition
| use transfer warranties, secondary liability if dishonored, HDC means nothing |
|
|
Term
| person in good faith pays or accepts v. a person who obtains payment and any prior transferor |
|
Definition
defendants: all holders, payee.
plaintiffs: drawee bank, maker, surety, drawee, acceptor, guarantor for payment, guarantor for collection, drawer. use presentment warranties. HDC aigf is defense. |
|
|
Term
|
Definition
| never going to happen because drawee has no liability. |
|
|
Term
|
Definition
| drawer must notify the drawee bank of forgeries within 14 days after receiving canceled checks. after 14 days drawer is liable for all subsequent forgeries. drawer has 1 year to report a forged drawer's signature. |
|
|
Term
| imposter rule/fictitious payee |
|
Definition
| exception to lack of title rule. if instrument is written/indorsed to a person to whom payment is not owed, the signature/indorsement is good and the business owner has to settle that with the forger. |
|
|
Term
|
Definition
| payee's bank. crediting account does not equal giving value. |
|
|
Term
| rescission of indorsement |
|
Definition
| voidable contracts can be rescinded. example a minor (thus contract is voidable) can rescind indorsement. |
|
|
Term
| transfer of unindorsed order paper |
|
Definition
| holder has a right to order the previous holder to indorse it. the depositary bank can supply your indorsement. |
|
|
Term
| to qualify as HDC: claims portion |
|
Definition
| without notice of overdue, dishonor, defenses or claims: incomplete instrument, irregular instrument. |
|
|
Term
| to qualify as HDC: overdue portion |
|
Definition
| without notice of dishonor, defenses, claims or overdue: time draft - one day after payable on date, demand instrument - reasonable time (check = 30 days) |
|
|
Term
| drawer v. drawee bank explained |
|
Definition
1. contractual agreement
2. principle/agent relationship - has a fiduciary duty not to pay over a forged signature, forged indorsement, material alteration.
3. creditor/debtor. |
|
|
Term
| death of a drawer (principle) |
|
Definition
| the relationship with bank is not cancelled, it can process checks up to 10 days after reasonable notice. estate must put stop payment on checks. |
|
|
Term
|
Definition
| acceptance of a time draft. two circumstances: if holder requests certification then drawer and all unqualified indorsers are discharged, if drawer requests certification, then no one is discharged. |
|
|
Term
|
Definition
|
|
Term
| revocation of certification by drawee bank |
|
Definition
| on basis of fraud or mistake unless: 1) holder is HDC, 3) mere holder has substantialy changed your position in reliance on certification. |
|
|
Term
| reacquired special indorsements |
|
Definition
| reacquirer can changed indorsement to whomever |
|
|
Term
| maker, acceptor, drawer warranties |
|
Definition
1. admits existence of payee
2. admits payee is capable to indorse |
|
|
Term
| indorsement with fraudulent intentions |
|
Definition
|
|
Term
|
Definition
| uniform consumer credit code. designed to protect consumer. only good on household products, not any service. only in a few states. |
|
|
Term
| bank disobeys stop payment |
|
Definition
| drawee bank is liable if drawer suffers a loss. |
|
|
Term
|
Definition
| can indorse correct name, incorrect name, or both. best to include both. |
|
|
Term
|
Definition
1. proper presentment
2. dishonor
3. notification of dishonor |
|
|
Term
|
Definition
on a note, present to maker
on a draft, present to drawee |
|
|
Term
|
Definition
| has effect on maker, acceptor, drawer, unqualified indorser. unless: it's beyond statute of limitations, or note is domiciled and bank fails. |
|
|
Term
|
Definition
| confession of judgment. if maker defaults, then payee just has to bring a lawyer to court to receive a judgment without the maker being there. |
|
|
Term
| late presentment for unqualified indorsers |
|
Definition
| must present within reasonable time or else indorsements are lost. |
|
|
Term
|
Definition
| a check that's more than six months old. the bank can honor it without notice to the customer. |
|
|
Term
|
Definition
| holder has to notify all parties that have 2 liability. banks must notify by midnight, people have 3 days. |
|
|
Term
|
Definition
| is possible, but HDC is the best person to know of problems with the note/draft. |
|
|
Term
|
Definition
| payee makes these to depositary bank. |
|
|
Term
|
Definition
| bank can honor. has criminal charges if does with intent. less than $500 is a 1st degree misdemeanor. 500-5000 5th degree felony, 5000-100000 4th degree felony, 100000+ 3rd degree felony |
|
|
Term
|
Definition
| changing the terms of acceptance ex. pay 50% on 2/1 and 50% on 3/1. if holder goes along with it then he cannot go after people with secondary liability. |
|
|
Term
|
Definition
| so many indorsements that you have to add additional paper to fit them all. |
|
|
Term
|
Definition
| applies to written documents, you can change a contract after you enter into it. exceptions: contract is incomplete, if contract is ambiguous, surrounding instruments ex. fraud. |
|
|
Term
|
Definition
payment in full:
1. by a primary party (guarantor for payment, maker, acceptor) everyone is discharged. 2. another other than a primary party, discharged that person and all subsequent parties. |
|
|
