Exam 17: Holders in Due Course,defenses,and Liabilities

Presentment can only be made in person by the holder of the instrument,properly identified.

Which of the following is true of real defenses?

Tammy purchases a promissory note that has numbers scratched out and rewritten.What legal problem will Tammy encounter in claiming to be a holder in due course of the note?

To be a holder in due course,the person in possession of the instrument must first give consideration and then be an indorser.

Ten-year-old Felicity fell in love with a golden retriever puppy which she saw in the window of Pet World.She decided to use the money she had saved from her paper route to buy the dog and wrote a $300 check,payable to Pet World.Does Pet World qualify as a holder in due course?

When Tina was fifteen years of age,she bought a car from Sam and signed a promissory note payable five years later.Sam negotiated it to Neighborhood Bank,who comes to collect on the note.Tina's age is a personal defense against Neighborhood Bank that allows her to disaffirm the payment.

________ means a demand made by a holder to pay or accept an instrument.

Indorsers are obligated to make the payment only when the:

The maker of a bearer note that has not been negotiated is obligated to pay the draft to anyone who is holding the instrument.

Tom gave celebrity Lynnetta Landau a blank sheet of paper and asked her to sign her autograph on it.Then,without Lynetta's knowledge,Tom wrote a promissory note made payable to him for $3,000 above her signature.This kind of fraud is known as fraud:

An alteration that involves changing the payee's name may be used as a personal defense.

Xena writes a check on her Boise Bank account to Hercules in the amount of $1,000,and gives it to Mutley.On the way to give Hercules the check,Mutley expertly alters the check by adding an extra "zero," to make it $10,000,payable instead to Mutley.Boise Bank honored the check payable to Mutley in the amount of $10,000.Regretfully,Xena has no recourse against Boise Bank.

Dishonor means:

Only the acceptor of a draft is obligated to pay an instrument without reservations of any kind.

Big Bank is unable to provide notice of dishonor for three days because a fiber optic cable was accidentally cut by a construction worker.Will Big Bank be liable for its failure to act in a timely manner?

A(n)________ of a note is required to ________ the instrument without reservations of any kind.

Regardless of the holder's actions,she may stipulate that she will not acquire the rights of a holder in due course if she cannot qualify as a holder in due course.

On May 15,2015,Jason indorsed a check dated January 15,2015,and payable by him to ALS Check Cashing Service.ALS:

A holder in due course must show that he took the instrument (1)for fair value, (2)in good faith.and (3)without any alteration.

Charles writes a check payable to Jane on his account at Friendly Bank.Friendly accepts the check,but subsequently determines that there are insufficient funds in Charles' account to pay the check.Explain what liability Charles has.