Exam 29: Liability of the Parties Under Negotiable Instruments

Which of the following is not a universal defense available against all holders?

Ordinarily, a maker's lack of capacity may be raised as a defense against a holder in due course.

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

A holder through a holder in due course is subject to only certain, limited defenses.

The close-connection doctrine applies in circumstances that indicate there may be a problem with the instrument.

A holder becomes a holder in due course if they meet all the following requirements except:

Fraud in the inducement is a:

A taker of an instrument who is a holder in due course at the time of the transfer, but who thereafter learns of a defense:

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:

The primary party on a draft is the drawee, assuming that the drawee has accepted the draft.

Generally, defenses that could be raised in a breach of contact claim cannot be raised against a holder in due course.

A(n) __________ is an unauthorized change or completion of a negotiable instrument designed to modify the obligation of a party to the instrument.

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

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

Instruments may be negotiated even if it is overdue.

The primary party on a certificate of deposit is the drawer.

An instrument is said to "run" to a holder if it contains any of the following attributes, except:

Bill decided that it was time to remodel his home.Among the features that Bill had included in his remodeling plan was the addition of several very large picture windows.Because of the great expense of the windows, Bill financed the cost through the issuance of a promissory note.The manufacturer of the windows sold the promissory note to a bank.Just after the promissory note matured, the windows began to leak badly.Bill refused to pay on his promissory note and brought action against the manufacturer for breach of contract.Will the bank recover on the promissory note?

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

The FTC rule, which provides that a notice provision must be included in all consumer credit contracts, requires that the notice: