Negotiable Class Notes with problems

Negotiable Class Notes with problems - Negotiable...

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Negotiable Instruments Chapter 1: Negotiability 1-201—General definition section 3-103—Negotiable instruments definitions Types of Negotiable Instruments Note —a written promise to pay money; 2 parties to a note. Draft —order to pay money. A written order by one person (the drawer—see 3- 103(a)(3)) to another (the drawee, 3-103(a)(2)), directing the latter to pay money to a 3 rd person (the payee). 3 parties to a draft. (A check is a draft drawn on a bank.) 3-104(f). Ex.: check o Rachel (drawer)---------the order of-------------------VISA (payee) o (Bank is drawee) o (Drawee “receives.”) o --VISA will then take check to get their money from Rachel’s bank. VISA will deposit into VISA’s bank and that bank will “present” it to Rachel’s Bank to please pay. Rachel’s Bank will look @ her account to see if she has sufficient funds to pay it. Problem When law student Portia Moot went to buy a used car from a man who sold it through the newspaper, the seller told her he refused to take her personal check, demanding instead a cashier’s check payable to his order. Portia went to Octopus National Bank and paid the bank the amount required, and the bank then issued the cashier’s check, with Portia’s car seller being named as Payee. The bank gave the check to Portia, and she in turn handed it over to the payee. What is the name that the Code gives to Portia in this situation? 3-103(a)(11). “Remitter”-3-103(a)(11): A person who purchases an instrument from its issuer if the instrument is payable to an identified person other than the purchaser. (cashier’s check, money order) --A negotiable instrument containing a promise to pay money is a note and one containing an order to pay money is a draft. 3-104(e). --If VISA negotiates the check to someone else, that person is called a “holder.” The following 2 cases consider whether the instruments were “negotiable”—if so, Art. 3 applies, if not negotiable, then the common law applies. Triffin : Travelers check (draft). American Express : Drawer Dillabough, Lynn : Payee Chuckie’s: check cashing service
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Issue : Whether certain American Express money orders are negotiable instruments pursuant to UCC, and if they are, whether Triffin has the rights of a HDC who may recover the face value of those money orders from American Express? Holding : The money orders in question are negotiable instruments and Triffin has the rights of a HDC, entitling him to recover the value of the money orders from American Express. Facts : o American Express sells money orders. o 3 American Express money orders were stolen from the premises of one of its agents, Chase Savings Bank. Some other money orders were also stolen. o
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This note was uploaded on 04/27/2010 for the course LAW 840 taught by Professor Tim during the Spring '10 term at University of Louisville.

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Negotiable Class Notes with problems - Negotiable...

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