Exam 22: Creating a Negotiable Instrument

Trisha loaned Brian $600 evidenced by a promissory note.When Brian paid off the loan,he did not ask Trisha for the note.She sold it to Carin,a holder in due course.Brian does not have to pay Carin since he already paid Trisha the full $600.

To be negotiable,a check must be in writing.Under the UCC,a check:

Handy Hardware purchases 1200 metallic hooks from Heavy Metals for $1.25 each.Handy promises to pay the money in three months.Heavy Metals wants the money now,as well as keeping Handy as a customer.Heavy Metals (as drawer)drafts an instrument ordering Handy (as drawee)to pay $1500 to First Bank (the payee).This instrument is:

Which of the following can be negotiable?

Define commercial paper and explain what it is used for.

Charlene has possession of a check made out to her order which she received in payment for writing a manuscript for her publisher.Charlene is a holder in due course and the publisher cannot claim any "real" defenses to payment.Charlene has an unconditional right to be paid for the check.

Margo is in possession of a check issued to her by Felix.The check states,"Pay to the order of Margo." If Margo wishes to transfer the check to Pete to pay a debt she owes him,all she needs to do is indorse the back of the check and give it to him.

Personal and real defenses are valid against an ordinary holder,only real defenses can be used against a holder in due course.

A check is the most common form of a draft.

An instrument is negotiable if it satisfies six standards.Which of the following is a standard of negotiability?

A possessor of non-negotiable paper has the same rights as the person who made the original contract.

Laurel Speckle received a check from State University.She indorsed the check as follows: "For Deposit only,/s/ Laurel Speckle." Laurel's indorsement is a:

Which of the following requirements must an instrument meet in order to be negotiable?

Valley National Bank issued a note promising to repay an investor on October 1,2011,three years from the date of issue,plus interest.The note:

When a holder in due course transfers an instrument,the recipient acquires all the same rights even if he is not a holder in due course himself.This is the definition of:

In the Rosenbaum v.Bulow,the court ruled that Bulow neither gave value for the promissory note nor acted in good faith.

Generally,Rita signs her name using an infinity symbol rather than her legal name.Rita signed an instrument using this symbol.Which statement is correct?

The Hartford Accident & Indemnity Co.v.American Express,Co.,the New York Court of Appeals discussed:

The term "issuer":

Explain the shelter rule.