Exam 27: Negotiation, Holder in Due Course, and Defenses

[Lost Check] Jenna Nguyen teaches business law at Learn-A-Lot University. Learn-A-Lot requested that all of the teachers ask the students to wear T-shirts with "Learn-A-Lot University Football" printed on the front on the day of the first football game. All of the teachers were asked to sell the shirts in class. A student, Quinn, wrote a check to Jenna for $10 for payment for one of the shirts. Quinn, however, put Jenna Nguyen as the payee. Jenna wanted to turn the check over to the school, so on the back of the check, she wrote, "Jenna Nguyen, without recourse." She then gave the check to the treasurer for Learn-A-Lot University, Amelia. Unfortunately, the treasurer for Learn-A-Lot dropped the check on the ground as she was going to the bank. A student, Brad, found the check and promptly took it to the bank and cashed it. The treasurer, Amelia, did not want to get into trouble, so she asked Jenna to personally cover the check because she said that Jenna had endorsed the check on the back guaranteeing payment. -What type of endorsement did Jenna make on the back of the check?

A(n) ________ is a party in possession of an instrument that is payable to the party or to the bearer.

In order for a holder to acquire the rights and privileges of an HDC, an instrument must be transferred directly from the HDC to the holder.

A payee can never be considered a holder in due course.

When is a time instrument not considered overdue?

Which of the following is a written document signed by the maker or drawer with an unconditional promise or order to pay a certain sum in money on demand or at a specified time to the order of bearer?

Under rules created by the FTC in the 1970s:

Which of the following are types of unqualified endorsements?

Which of the following is the payee's or last endorsee's signature and nothing else?

Kira, who owned a pet store, bought a number of dog leashes from a business called Happy Paws in Florida. Kira, who was somewhat unorganized, was very busy and told her assistant, Gio, to pay her bills, including the bill she owed to Happy Paws. Kira had lost the invoice. She knew that she owed Happy Paws $1,000, and simply told Gio to send Happy Paws $1,000. She told Gio she did not know the address, but that he should be able to find it on the Internet. Gio checked on the Internet and found a listing and an address for a company called Happy Paws in North Carolina. Gio sent the check for $1,000 to Happy Paws in North Carolina. The bookkeeper for Happy Paws in North Carolina did not act in bad faith and thought that the check was for goods sent to Kira. The treasurer endorsed Kira's check along with a number of other checks to ABC Financing Company in order to receive operating funds. Happy Paws in North Carolina was not affiliated with the Florida Happy Paws. In fact, Happy Paws in North Carolina sold booties for children. Happy Paws in North Carolina was also in financial difficulty and went bankrupt. Happy Paws in Florida contacted Kira regarding the $1,000 they were owed. Kira and Gio then discovered their mistake. They requested that Happy Paws in North Carolina refund the money, but bankruptcy prevented that. Kira then attempted to get the funds returned from ABC Financing. What is the most likely result regarding Kira's attempt to receive the funds from ABC Financing and why?

How may the holder endorse the document in the event of a misspelled name?

Which of the following types of endorsements attempt to either limit the transferability of the instrument or control the manner of payment under the instrument?

Set forth the requirements a party must meet in order to be considered a holder in due course.

What is the effect of an unqualified, blank endorsement?

An endorsement that is followed by a statement that restricts payment, and can be used as a defense for the endorser against the endorsee, is which of the following?

When a consumer credit contract is transferred to a subsequent holder, the holder obtains all the rights just as if they were the original HDC.

At any date after the expressed due date on a time instrument, the instrument becomes overdue.

[Lost Check] Jenna Nguyen teaches business law at Learn-A-Lot University. Learn-A-Lot requested that all of the teachers ask the students to wear T-shirts with "Learn-A-Lot University Football" printed on the front on the day of the first football game. All of the teachers were asked to sell the shirts in class. A student, Quinn, wrote a check to Jenna for $10 for payment for one of the shirts. Quinn, however, put Jenna Nguyen as the payee. Jenna wanted to turn the check over to the school, so on the back of the check, she wrote, "Jenna Nguyen, without recourse." She then gave the check to the treasurer for Learn-A-Lot University, Amelia. Unfortunately, the treasurer for Learn-A-Lot dropped the check on the ground as she was going to the bank. A student, Brad, found the check and promptly took it to the bank and cashed it. The treasurer, Amelia, did not want to get into trouble, so she asked Jenna to personally cover the check because she said that Jenna had endorsed the check on the back guaranteeing payment. -Was the check properly delivered to Brad?

The transferability of an instrument may be limited by a restrictive endorsement.

A party cannot be a holder in due course of a non-negotiable instrument.