Exam 25: Transfer and Holder in Due Course

An anomalous indorsement is:

A person can be a holder if:

An indorsement "for deposit" is a collection indorsement.

Michael issues a check to Paula. She negotiates the check to Hal as payment for a used television set. Hal has no notice of any claims or defenses and takes the check in good faith. Hal indorses the check and gives it to his son as a birthday present. Is Hal's son a holder in due course? What rights does he have with respect to the check? If Michael has a defense of fraud in the inducement against Paula, can he use that defense against Hal or Hal's son?

Lily drew a check on First Bank payable to Shelley. Lily signed the check in the normal place at the bottom, right side of the check. Glenn signed the check at the bottom left of the front of the check. In what capacity will the Code interpret Glenn to have signed? Will Glenn be able to introduce parol evidence to establish his intent?

To acquire the preferential rights of a holder in due course, a person either must meet the requirements of the UCC or must inherit the rights under the shelter rule.

Which of the following is not a restrictive indorsement?

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

Sharp Finance Company has furnished Keith with some pre-printed forms for customers to sign to finance repairs on their homes. After the customers sign the notes naming Keith as the payee, he sells them to Sharp Finance. Sometimes Keith is busy and does a poor job on the homes so he can get on to the next job. When customers complain, he says he'll get around to fixing the problems. If the customers don't pay the note, Sharp Finance sues them. Can the customers use the defenses they have against Keith against Sharp? Explain.

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

Vicki, a bookkeeper for Emilio Enterprises, steals some of the checks she is supposed to post to her employer's account. She forges her employer's indorsement. The indorsement is:

Real defenses include all but:

"Order paper" is negotiated by delivery only.

Maxine indorsed her paycheck by signing her name on the back, but she lost it on the way to the bank. The check is now comparable to cash because it is a bearer instrument.

An indorsement "Pay to Jones Construction Company upon completion of the job at No. 10 Park Place" is ineffective under Revised Article 3; the indorsee can enforce the instrument.

Marie is the bookkeeper for the Buildco Construction Company. She makes out the payroll; prepares all of the payroll checks and reconciles the bank statements for the firm. She decides to increase her income by padding the payroll; accordingly, she makes out a check in the name of someone who does not exist. She then indorses the check with the payee's name and her name and cashes the check herself at First Bank where the company has its account. Under the fictitious payee rule, Buildco and not the bank will be liable for this check.

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

The case, State of Qatar v. First American Bank of Virginia , held that:

A negotiation is void if the transaction in which it occurs is void.

David makes and delivers a promissory note for $500 to the order of Kerry, who indorses the note and delivers it to Stan in payment of an outstanding debt Kerry owes him. Stan has given value as far as the Code requirements for a holder in due course.