Term
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Definition
| The person who creates a draft |
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Term
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Definition
| The person who creates a note |
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Definition
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| A written promise to pay money, has two parties |
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| Bank is the drawer and drawee |
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Definition
| The person who buys the cashiers check in order to pay a debt; it is in their interest but their name isn't required to be on it |
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Term
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Definition
| the person in possession of a negotiable instrument that is payable either to bearer or to an identified person that is the person in possession |
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Definition
| any signature is an indorsement unless its location tells us otherwise |
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Definition
| it must say “pay to” somebody |
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Definition
| doesn't say who it is payable to; transforms into a bearer paper instrument; can always convert it into a special |
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Term
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Definition
| one who takes an instrument for value in good faith absent any notice that it is overdue, has been dishonored, or is subject to any defense against it or claim to it by any other person.;able to enforce that instrument againist an earlier obligor without regard to most of the defenses he would like to assert |
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Term
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Definition
| Objective good faith and normal commercial standard |
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Term
| Distinction between notice and Knowledge |
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Definition
| the definition of notice is broader than the def. of knowledge |
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Definition
| has been more than 90 days so the holder who takes the check more than 90 days after issue, he can’t take it as a holder in due course |
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Term
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Definition
| "attempts to establish is that whenever A transfers a neg. instrument to B, B will get whatever rights in that instrument A had " |
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Term
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Definition
| If its is a gift, you can't have HDC status, but if the person who gave you the gift is a HDC, you can have the rights transferred under the shelter rule but not the status. |
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Term
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Definition
| arises when you sell something that is defective and the one who purchased chooses to keep it rather than return it, but incure loses bymaking it work and is entitled to recoup those losesses from the seller from the effective sale |
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Term
| Defenses against HDC ( real) |
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Definition
| 1. infancy, 2. duress, lack of legal capacity 3. fraud that induced the obligor to sign without knowledge, 4. Insolvency proceedings |
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Term
| Defenses and claims in recoupment for HDC |
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Definition
| takes the instrument free or subject to only the a1 defenses and is not subject to the a2 defenses with one exception, the holder in due course is subejct to a claim in recoupment by the person he dealt with |
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Term
| negotiation can be subject to what remedies? |
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Definition
| can be rescended or subject to other remedies, but it cant be asserted againist a subsequent holder in due course or a person paying the instrument in good faith and without knowledge of facts that are a basis for recission or other remedy. |
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Term
| Forgery of a name in a note |
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Definition
| Foregery ness. for to a valid negotiation , there can be no HDC following the forgery because no later transferee will qualify as a holder |
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Term
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Definition
| lines for a specimen signature and a counter signature |
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Term
| When looking at an instrument |
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Definition
| 1)labels (drawer, payee) 2)causes of action for each party 3) possible defenses 4) can liability can be passed on? |
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Term
| Suing on a note that has been sold |
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Definition
| Assuming payment by a note or an ordinary check, the obligation has not yet been paid, but importantly, the right to sue on the obligation has been suspeneded |
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Term
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Definition
| checks are payable on demand; the obligation is discharged because this applies and unless they otherwised agreed, payment with a cashiers check immedietely discharges the obligation |
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Term
| Obligation of a maker of a note |
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Definition
| Obliged to pay the instrument not just a share |
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Term
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Definition
| we presume contribution among them in equal shares |
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Term
| Obligation of an Indorser |
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Definition
| The obligation of the indorser is owed to a person entitled to enforce the instrument or to a subsequent indorser who paid the instrument. |
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Term
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Definition
| indorsers who do not indorse as joint payees and are not anonlymous, they are not jointly and severaly liable |
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Term
| multiple accomodation parties |
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Definition
| we treat them as co-surities. They are jointly and severatly liable. |
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Term
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Definition
| are jointly and severaly liable under 3-116(a), they have a right of contribution 3-116(b) |
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Term
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Definition
| whenever an accomodation party pays the instrument without regard to what capacity they signed it, the accomodation party who pays the instrument is always entitled to be reimbursed by the person who they signed the accomodation for |
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Term
| Without Recourse Indorsement |
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Definition
| you have indorsed for only purposes of transfering the instrument, not for paying; is to allow the two latter parties to decide who wants to take the risk of the insolvency |
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Term
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Definition
| the main primary person, the one taking the one out |
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Term
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Definition
| who signs a NI, becomes for that reason, an accomodation party. |
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Term
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Definition
1. underlying obligation between the principal and creditor
2.The promise of the surety to back up the underlying obligation and see that the creditor loses nothing as a result of accepting the principal's promise on the first contract.
3. The promise of the principal to reimburse the surety if the surety is forced to pay off on the surety's promise to the creditor. |
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Term
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Definition
| If you want to gurantee collection you have to say so |
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Term
| A contract guaranteeing the payment of a note |
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Definition
| an absolute contract and by it the guarantor undertakes for a valuable consideration, to pay the debt at maturity of the principal debtor fails to do so and upon it, if the debit is not paid at maturity, the guarantor may be sued at once. |
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Term
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Definition
| if you pay off the note to a holder, that discharges your obligation as an obligor on a note |
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Term
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Definition
| absolutely liable; has no technical implied conditions to it |
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Term
| Refusal of Tender of Payment |
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Definition
| there is discharge, to the extent of the amount of the tender, of the obligation of an indorser or an accommodation party having a right of recourse with respect to the publication to which the tender relates |
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Term
| Tender of payment of an amount due made to person entitled to enforce the instrument |
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Definition
| the obligation of the obligor to pay interest after the due date on the amount tendered is discharged. If presentment is required with respect to an instrument and the obligor is able and ready to pay on the due date at every place of payment stated in the instrument, the obligor is deemed to have made tender of payment on the du date to the person entitled to enforce the instrument. |
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Term
| Person who tenders payment |
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Definition
| is never discharges, other than for post due date interest, those who have right of recourse will typically be discharged |
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Definition
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Term
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Definition
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Term
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Definition
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Term
| During an Untimely presentment |
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Definition
| almost never discharges the drawer of a check, the only time a drawer is discharged by untimely presentment, is when the drawee bank is shut down/ suspends payment during a crisis, and the funds lost to cover check |
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Term
| Refusal to certify a chck |
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Definition
| the drawee of a check has no obligation to certify the check and refusal to certify is not dishonor of the check, t |
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Term
| Anyone signing as an agent |
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Definition
he is liable on the note even though his name doesn’t appear on the note as long as the signature was authorized by the principal
teaches us that when the question is if the signature binded , then ask whether the principal had given the agent authority to sign, whether his name is on there or not
what about the liability of the agent? even if the agent don’t sign there name anywhere on the instrument, an unauthorized signature acts as the person who did the signing, it is as though legally the person signed their own name and they are obligated under |
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Term
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Definition
1) signed on behalf of a drawer
2) cannot be altered
3) paid to a holder |
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Term
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Definition
| you need to give them notice “even if the payment was made before the date of the check, unless the customer had given notice to the bank of the postdating describing the check with reasonable certainity. “IF she was to phone the bank, it would not be properly payable if she phoned the bank and warned it about the post dated check, it would not be properly payable and the bank would be liable for damages. It is the drawer who takes the risk with a postdated check, not the bank |
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Term
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Definition
| as long as authority was given, doesn’t matter whose name was signed. |
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Term
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Definition
| Must give adequate information to the bank and reasonable amount of time. |
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Term
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Definition
| to step into the shoes of its customer and to sue any party he or she could have sued. |
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Term
| the reason the remitter of a cashiers check |
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Definition
| doesnt have right to stop payment is because the right belongs to the drawer on the account |
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Term
| Filing a Decleration of Loss |
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Definition
| the bank will still pay the check if it shows up in the 90 day period |
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Term
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Definition
| discharges all liability of the obligated bank with respect to the check. |
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Term
| Lost, stolen, destroyed or stolen cashier's checks, tellers checks or certified check |
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Definition
| the claimant is obligaed to refund the payment to the obliged bank if the check is paid or in this case, pay the amount of the check to the person having rights of a holder in due course if the check is dishonored., |
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Term
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Definition
| look for if any payment was not authorized due to alteration, a proported signature on or on behlf of the customer was not authorized ( the drawer) .the purpose of the bank statement is for you to check for the first two problems .if you reasonable discover any of these, you should tell the bank! |
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Term
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Definition
| has the same legal consequence of the original check written |
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Term
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Definition
| occurs when the bank has paid final item in cash |
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Term
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Definition
| Is final payment. Next business day after check deposited on midnight |
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Term
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Definition
| the single exception to the midnight deadline rule. a bank that waits beyond the midnight deadline may the next day use a highly expeditious reed courier or electronic transmission, return the checks by a method that gets them back to the depository bank that same banking day |
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Term
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Definition
| ends when final payment made |
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Term
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Definition
| requires transfer of posession and the indorsement of the payee. |
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Term
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Definition
| it specifies whom the instrument is now payable. |
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Term
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Definition
| a payor bank /intemediary bank are not liable. the only time a payor bank is liable is when it is also the depositary bank. and if it is the depository bank thats why it is liable. So THEREFORE, the first bank to take a check with a restrictive indorsement is obliged to follow the instructions given by that indorsement |
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Term
| Conversion Rules for Indorsement |
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Definition
| a depositary bank that pruchases the instrument or takes it for collection when so indorsed converts the instrument unless the amount paid by the bank with respect to the instrument is received by the indorser or applied consistently with the indorsement |
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Term
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Definition
| These warrantees can be enforced against the presenter and all transferers, by the drawee and only the drawee. |
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Term
| Forgery of a payee's name |
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Definition
| Means the forger is liable on the instrument ; everyone taking an instrument after an invalid negotiation of an item with the forged instrument is NOT a person entitled to enforce the instrument |
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Term
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Definition
| a bank converts a check if it is taken by transfer other than negotiation from a person not entitled to enforce the instrument |
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Term
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Definition
a prereq for suing under conversion is that you have acquired some possessory interest in the check. If they have taken the check for obligation, they would not have been able to sue.
Also, Forged indosement and abscence of indorsement dont make a holder |
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Term
| Recover Payment based on forged drawers signature |
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Definition
| When a drawee accepts or makes final payment on a draft it can not recover that payment because of a forged drawers signature |
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Term
| Negotiation of an order instrument |
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Definition
| requires transfer of posession and indorsement by the holder. |
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Term
| Forgery of a special endorsee's name |
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Definition
| 1. no valid negotiation takes place, no one taking an instrument after the forged endorsement qualifies as a person entitled to enforce the instrument |
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Term
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Definition
| Warrantor is a person entitled to enforce or authorized to accept payment, the draft has not been altered, no knowledge that the signature of the drawer is unauthorized and the amount of a remotely created consumer item is authorized by the drawer. This is made for an unaccepeted draft made in food faith, ; made by the person obtaining payment or acceptance and a previous transferor of the draft |
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Term
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Definition
Warrantor is a person entitled to enforce, all signatures are authentic and authorized; and the amount of a remotely created consumer item is authorized by the drawer.
It isMADE by a transferor of the instrument, for consideration to the transferee and if indirosed to any subsequent transferee |
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Term
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Definition
| This only applies to endorsements. An indorsement by anyone, in the name of the person, indorsement will be effective to negotiate the instrument. It does not matter who signs the name |
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Term
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Definition
| Applies to indorsements as well. |
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Term
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Definition
Any person can indorse on behalf of a ficticious payee
THe question of negligence lies on how did you open theaccount? with or without id?
IF he used the name of real people? does it effect the outcome? Even though they are real payeees, these checks are still properly payable and the indorsemensts are effective because the drawer did not have benefit of the check |
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Term
| Employer's Responsibility |
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Definition
| If the payment is made effective but someone else is negligent in taking or paying the check, then they will proportion the loss between employer and who was negligent. but would need evidence to find that negligence; is targeted at employers wherther they drawers or payees |
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Term
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Definition
Validates forgeries when negligence substantially contributes to the forgery.
has to be negligence that has a clear causal relationship to the forgery.
For instance, if you left check with electronic signature device, then that is negligence because thats what leads to the foregery. |
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Term
| Violation of Reasonable care |
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Definition
| A part of negligence. Must take reasonable care to ensure a item is taken care of properly. |
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Term
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Definition
| Issusance to a ficticious payee or a person not intended to have an interest will validate a forged indorsement; an agent or employee only need furnish the payee's name; the person forging the endorsement does not have to be the person who supplied the name of the payee |
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Term
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Definition
| Issuance to an imposted will validate a forged indorsement, and impostor neeed not communicate in person with the drawer, the person forging the endorsement does not have to be the person who was the imposter. |
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Term
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Definition
| Customer must promptly let the bank know of the relevant facts. |
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