Exam 29: Transfers of Negotiable Instruments and Warranties of Parties

An instrument that originally was bearer paper always remains bearer paper.

A transferor may be able to set aside a negotiation obtained by fraud or duress unless:

A blank indorsement turns a(n) __________instrument into a(n) __________ instrument.

When a negotiable instrument is assigned, the transferee has the rights of the transferor.

If an instrument is payable to bearer, it may be negotiated by transfer of possession alone.

If an instrument is payable to alternative payees or if it has been negotiated to alternative indorsees, it may be indorsed and delivered by either of them.

Order paper is negotiated by the indorsement of the holder and delivery.

If an assignment of an instrument takes place, the assignee:

Clark is the senior payroll clerk for the Gonzalez Corporation. In preparing the weekly payroll checks for the corporation, Clark added the name of Simmons to the payroll list. Clark knew that Simmons was not an employee of the corporation. Lewis, the treasurer of the corporation, signed the payroll checks and delivered them to Clark. Clark distributed all of the checks to the correct employees with the exception of the one made payable to the order of Simmons. Clark endorsed the name of Simmons to the check, cashed it with Diamond Check Cashing, and vanished. In this situation:

An instrument may be transferred by negotiation or by assignment.

Thomas, the holder of a check, presents it to the drawee bank for payment. If Thomas endorses the check, Thomas warrants that the account of the drawer in the drawee bank contains funds sufficient to cover the check.

A qualified indorsement is given by using the phrase __________.

Under the UCC, a negotiation is not effective when it is made by a minor or any other person lacking capacity.

When a negotiable instrument is negotiated by delivery without indorsement, the warranty liability of the transferor runs:

An unqualified indorser who receives consideration for the indorsement impliedly warrants that:

An endorsement is restrictive when:

Negotiation of order paper requires:

A person who acquires the instrument on which the last endorsement is blank becomes the holder.

Order paper can be converted into bearer paper by the holder's blank endorsement.

The transferee has only those rights that were possessed by the transferor of the note when a transfer of an instrument is made by: