Exam 30: Liability of the Parties Under Negotiable Instruments

Fraud in factum:

Value is similar to consideration..

Which of the following will not be considered value in connection with determining holder in due course status?

In 1976 the Federal Trade Commission adopted a rule that expands the rights of a holder in due course in a consumer credit transaction.

Manuel sued Patricia on a promissory note.Patricia admitted signing the note,but raised the defense that Manuel was not a holder in due course.Can Manuel recover without proving that he is a holder in due course?

Jones issued a check to Smith in return for Smith's promise to do work.Smith never did the promised work,but offered to buy goods from Gomez by endorsing the check to Gomez.Gomez had had no prior dealings with Jones or Smith,but accepted the check in payment.Gomez:

A holder may:

A holder having the rights of a holder in due course is subject to the defense of fraud in the inducement.

A holder through a holder in due course:

A negotiable promissory note was issued by Gold.It was properly issued in all ways.Nevertheless,the payee managed to alter the note and raise the amount from $500 to $5,000.A holder in due course presented the note for payment to Gold who discovered the alteration.In this case:

A person who acquires a negotiable instrument with notice or knowledge that any party might have a defense or that there is any adverse claim to the ownership of the instrument:

A universal defense will defeat a holder in due course and a holder through a holder in due course.

Bad faith sometimes exists just because a transferee takes an instrument under odd circumstances.

A holder in due course must meet all of the following conditions except:

A holder can recover from any of the parties who are liable on the instrument,regardless of the order of the signatures on the instrument.

A taker of a negotiable instrument may be denied the status and protection of a holder in due course where:

For a change to constitute an alteration,the person making the change must be a party to the instrument.

Fraud in the inducement is a:

When the primary party refuses to pay an instrument according to its terms,said party is required to give:

Presentment occurs when the primary party refuses to pay an instrument according to its terms.