Exam 29: Transfers of Negotiable Instruments and Warranties of Parties

A blank indorsement turns a(n)__________instrument into a(n)__________ instrument.

A __________ indorsement consists of the signature of the indorser and words specifying the person to whom the indorser makes the instrument payable.

Thomas,the holder of a check,presents it to the drawee bank for payment.If Thomas indorses the check,Thomas warrants that the account of the drawer in the drawee bank contains funds sufficient to cover the check.

When a negotiable instrument is negotiated by delivery without indorsement,the warranty liability of the transferor runs:

The transferee has only those rights that were possessed by the transferor of the note when a transfer of an instrument is made by:

In the case of a check,when the impostor rule applies:

If an instrument is payable to bearer,it may be negotiated by transfer of possession alone.

The warranty liability of a qualified indorser is the same as that of an unqualified indorser.

The warranties made by an unqualified indorser guarantee that payment of the instrument will be made.

The transfer and collection of negotiable instruments between banks requires specific indorsements.

Al was a well-respected attorney in a small town.A couple retained Al to represent them on the purchase of a home.Before closing,Al informed the couple of payments that they were required to make by check at the closing.Among the required payments the attorney told the couple to make were a check for $1,500 to Bob Brown and a check for $610 to Susan Lee.The attorney explained that the check to Brown was for a survey of the property and the check to Lee was for termite control work that the couple had authorized. The checks were issued and taken by Al who promised to deliver them.Al did not,however,deliver them.Instead,Al forged the indorsements of the respective payees and cashed the checks.When Al was later arrested on a similar matter,the couple learned what had happened. The couple made a claim against its bank for reimbursement,claiming the bank was not authorized to pay these checks because they had not been effectively negotiated to the bank.When the facts came to light,no person named Bob Brown had done a survey on the property,but the termite work had been done by Lee.Decide both cases.

If an instrument is payable to alternative payees or if it has been negotiated to alternative indorsees,it may be indorsed and delivered by either of them.

A person who acquires the instrument on which the last indorsement is blank becomes the holder.

A special indorsement consists of the signature of the indorser and the words identifying the person to whom the indorser makes the instrument payable.

When the name of the payee is spelled incorrectly,the payee:

A blank indorsement indicates the person to whom the instrument is to be paid-that is,the transferee.

A qualified indorsement qualifies the effect of a blank or special indorsement by disclaiming certain liabilities of the indorser to a maker or drawee.

Negotiation of bearer paper requires:

The transferring of an instrument in such a way as to make the transferee the holder of the paper is termed:

The order or bearer character of the paper determines how it may be: