Exam 18: Negotiable Instrument: Transferability Liability

Ollie negotiates an order instrument to Phil by

If a note is payable in thirty days,payment is due by midnight on the thirtieth day.

A person who in good faith acquires a negotiable instrument from a thief cannot become an HDC.

Kris transfers a note,on which Liu is the maker,to Mia,who takes it for value and in good faith.Mia knows that Kris breached the contract underlying the note,giving Liu a defense against payment.With respect to this note,Mia is

Commercial Credit Company has in its possession an instrument dated May 1,2009.The instrument is payable to the order of Alpha Company "on June 1,2009," for $5,000.In the upper left corner is an address for Beta Corporation-10 Corporate Park Avenue,Chicago,Illinois-and in the lower right corner is the signature of "Delta,Inc.,By Eve,President." In the lower left corner is stamped "ACCEPTED: Beta Corporation by Frank,President,May 5,2009." On the back is the signature of "Alpha Company by Gail,President." What type of instrument is this? Is it negotiable? Who,if anyone,is primarily liable on this instrument on May 1? On May 5? Who,if anyone,is secondarily liable on this instrument?

On the back of a check payable to Nero,he writes "Pay to Odell,without recourse" and signs it.This

A person whose name is forged on an instrument is liable to pay only a holder in due course the value of the forged instrument.

Fact Pattern 18-2 Jake is the maker of a $2,000 promissory note payable to Kim. Kim indorses the note to Lou who, in turn, indorses it to Mona, who then in¬dorses it to Nat, the present holder. -Refer to Fact Pattern 18-2.Nat properly presents the note to Jake for payment,but Jake dishonors it.With timely notice to the proper parties,Nat may collect payment on the note from

Fact Pattern 18-1 (Questions 1-2 apply) Ewa signs an instrument unconditionally promising to pay to "First State Bank" $5,000 with interest in installments with the final payment due June 1, 2012. -Refer to Fact Pattern 18-1.With respect to this instrument,First States Bank is

Petra signs a check payable to Quincy,who indorses the back,gives it to Regional Credit Union,and receives cash.The transfer of the check from Quincy to the credit union is

Rodeo Ranch's agent Slim is authorized to draw checks on Rodeo Ranch's account in Town Bank.Upper Range Corporation is a Rodeo Ranch supplier.Slim writes a check "pay to the order of Upper Range [signed] Slim," indorses the check in Upper Range's name,and deposits it in his account in Verity Bank.If Verity Bank collects payment,the ultimate party most likely to suffer the loss is

GR8 Products,Inc.,warrants its goods to be free of defects.If Heck issues an instrument to obtain goods from GR8 that prove defective,Heck can avoid paying on the instrument

Jen makes a gift of a check to Kilroy who takes it in good faith and without notice of any claim,defense,or defect.With respect to this check,Kilroy is

To finance the purchase of a house from Tuna,Uri signs an instrument promising to pay to "Verity Mortgage Service" $160,000 with interest in installments with the final payment due July 10,2040.To be negotiable,this instrument must include the signature of

To pay for a new desk bought at Office Outlet,Pete makes a check payable to "Offs Outlet." A proper indorsement of the check is

An order stating "I wish you would pay" is sufficient to create a negotiable instrument.

An instrument is not defective because it has been previously dishonored.

Presentment warranties protect the person who presents an instrument for payment.

The recipient of a negotiable instrument becomes a holder regardless of the form of the transfer.

EZ Credit Company signs an instrument payable to the order of Flem that states,"The maker of this note at the date of maturity,May 1,2013,can extend the time of payment,but for no more than a reasonable time." This instrument is