Exam 25: Transfer and Holder in Due Course

Identify the type of indorsement each of the following represents. a. Pay to Bill, for collection. b. Pay to the order of The American Bank for deposit only. c. Pay to Albert, without recourse. d. John Smith.

The principal advantage of negotiable instruments is their legitimacy.

A negotiation to transfer an instrument cannot be effective if it is  made by a person without contractual capacity.

Which of the following is required regarding indorsements?

Laura is in possession of a check which contains the following indorsement, "Sam Smith, without recourse, for collection only." The indorsement would be classified as:

Which of the following is not a restrictive indorsement?

The requirements for negotiation are the same for both order paper and bearer paper.

A(n) ___________ is the voluntary transfer to a third party of the rights arising from a contract.

Assuming a note made by Barbara payable to Carol Jones, which indorsement will limit negotiability?

The impostor rule is an exception to the general rule that negotiation of any order instrument requires a valid indorsement by the person to whose order the instrument is payable.

Any transfer for value of an instrument is a negotiation.

A person can be a holder if:

An indorsement "for deposit" is a collection indorsement.

Revised Article 3 provides that the impostor rule does not include an impostor who impersonates an agent of a principal and who induces someone to create a negotiable instrument payable to the principal.

The FTC upholds the preferential position enjoyed by a holder in due course of instruments concerning debts arising out of consumer credit contracts.

One who is in possession of a negotiable instrument that is drawn, issued, or indorsed to him or to his order or that is indorsed in blank is a(n):

Identify the defenses that can be used against a holder in due course and those defenses that cannot be used against a holder in due course.

Mycha indorsed a check from her aunt by signing her name on the back, but she dropped it on the subway on the way to the bank. The check is now comparable to cash because it is a bearer instrument.

An executory promise, which is valid consideration to support a contract, is also the giving of value to support holder in due course status.

"Pay to the order of Jose Dejesus" is a special indorsement.