Exam 20: Negotiation, Endorsements, and Holder in Due Course

__________ is both a real defense and a personal defense.

While HDC status provides immunity from personal defenses or claims in recoupment, it does protect an HDC from being subjected to any real defenses.

Article 3 of the UCC provides a two-part definition that describes good faith as meaning:

Most courts have held that the Holder Rule only comes into play to allow a consumer's claim/defense against the __________ to be asserted against the creditor that is demanding payment under the consumer creditor contract.

If the instrument is __________, the holder cannot meet the requirements for Holder in Due Course status.

Article 3 admits __________ to prove an individual did not sign personally in all instances where the holder is not a holder in due course.

Each negotiable instrument is made up of a series of events beginning with the issuance of the instrument by the party promising to make a payment and ending with __________ of the instrument by the party seeking to receive payment.

Holders in due course have immunity from claims in recoupment.

Article 3 of the UCC sets a higher bar in its __________ by requiring that a negotiable instrument be taken for value by the holder for a promise that has already been performed.

FTC regulations make it an "unfair or deceptive act or practice" under the Federal Trade Commission Act for any __________ to use a consumer note unless it contains a notice statement that is specified in the regulations.

Barton Beers sells 5,000 of a variety microbrewed beers to Bars Inc for $50,000 for delivery by October 1 for the OctoberFest Celebration. Barton Beers receives a promissory note signed by Bars Inc for $10,000 due on November 1. The microbrewed beers arrive on time, but Bars Inc determines 20 percent of the beers are not microbrewed beers. They were made by traditional breweries. Because October 15^th is the deadline for the regional OctoberFest Celebrations as set by Bars Inc, Bars Inc opts to purchase the remaining microbrewed beers from a more expensive brewer. Bars Inc's efforts to secure the new microbrewed beers cost an extra $14,000. Must Bars Inc pay the $50,000 note on November 1? Why or why not?

The __________ plays a central role in the story of a negotiable instrument:

The holder of a negotiable instrument is a holder in due course (HDC) if the holder has taken the instrument __________; in good faith; and without notice of it being overdue, fraudulent, or subject to claim by another party.

__________ notice is not sufficient notice to the holder under Article 3.

Article 3 provides for personal defenses that may be asserted by a third party. Which of the following is not a personal defense?

The __________ requirement is particularly important to obtaining HDC status because it separates innocent holders from those who know or should know that the negotiable instrument is defective or fraudulent in some way.

Article 3 of the UCC contains the following defense/(s):

A negotiable instrument may only be transferred to the party the __________ intended as a holder.

Only transactions between a consumer and a __________ who is regularly engaged in the sale/lease of the products or service at issue are covered by the Holder Rule.

Name and describe the process of negotiating a negotiable instrument.