short OUTLINE Negotiable Instruments

short OUTLINE Negotiable Instruments - I NEGOTIABLE...

Info iconThis preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
I. NEGOTIABLE INSTRUMENT a. Types i. Notes ii. Certificates of Deposit iii. Drafts 1. Checks iv. Bank checks 1. Cashier’s checks 2. Teller’s checks 3. Certified checks v. Traveler’s checks b. Requirements for Negotiability i. Writing ii. Signed iii. Unconditional promise or order iv. Principal sum payable in a fixed amount of money v. Payable to order or bearer vi. Payable on demand or at a definite time 1. On demand: a. Fails to state when payment is due vii. Contains no other undertaking or instruction by the person promising or ordering payment to do any act in addition to the payment of money. II. HOLDERS IN DUE COURSE a. Holder i. Possession of the instrument 1. Ways of acquiring holder status: a. Issuance – first delivered by the maker or drawer to either a holder or non-holder for the purpose of giving rights on the instrument to any person. b. Negotiation – transfer of possession of an instrument, whether voluntary or involuntary , by a person, other than the issuer, to another person who thereby becomes its holder. i. Payable to bearer – transfer of possession alone. ii. Payable to order – transfer of possession plus indorsement to that person or bearer. c. Indorsement – for negotiation, an instrument must be written by or on behalf of the holder. A forged or unauthorized indorsement is not effective to negotiate the instrument. i. Special – identifies the person to whom the instrument is payable. ii. Not payable to an identified person. iii. Must be written on the instrument. iv. Manner of negotiation depends on last indorsement.
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
v. The person to whom the instrument is payable is determined by the intent of the person signing the instrument as the issuer, in the name of the issuer, or on behalf of the issuer whether or not that person is authorized. Even if the payee is identified by a name other than her real name. An indorsement in either name is effective to negotiate. vi. Two or more payees: 1. Jointly – all payees must participate in the negotiation. 2. Alternative – any payee in possession of the instrument. 3. Ambiguous – deemed payable in the alternative. vii. If a customer delivers an item to a depositary bank for collection, whether or not the customer indorses the item, the depositary bank becomes a holder of the item at the time it receives the item if the customer, at the time of delivery, was a holder of the item. ii. The obligation evidenced by the note must run to him b. For value i. Promise of performance to the extent the promise has been performed. ii. Security interest or lien other than through judicial proceedings. 1. Security interest a. Voluntary transfer, or b. Collecting bank automatically acquires under 4-210(a) i. Only to the extent that the bank allows the customer to use the funds. 1.
Background image of page 2
Image of page 3
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

Page1 / 7

short OUTLINE Negotiable Instruments - I NEGOTIABLE...

This preview shows document pages 1 - 3. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online