fall 2010 bule 402 liability for NI

fall 2010 bule 402 liability for NI - Commercial...

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2/6/11 Commercial Transactions: Liability for Negotiable Prof. Julie Shubin Bule-402-002-S10 Commercial Law © Julie Shubin 2010
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2/6/11 Cat of the day
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2/6/11 “It is never wise to play an important game without understanding the rules. The rules of negotiable instruments are complex, but important because this game is played by virtually everyone.”
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2/6/11 vocabulary Issuer Signature liability Warranty liability primary liability Secondary liability Presentment Dishonor
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2/6/11 Liability Signature liability – liability of someone who has signed a document. Warranty liability -- liability of someone who has received payment.
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2/6/11 Contract vs. Instrument Negotiable instruments are issued to fulfill a contract. The instruments create a second contract to pay the debt created by the first agreement. Once an instrument is accepted in payment for a debt, the debt is suspended until the instrument is paid or
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2/6/11 Enforcing an Instrument In a signature liability, to whom is the signer liable? To the holder of the instrument. To anyone to whom the shelter rule applies (non-holder with the rights of a holder). A holder who has lost the instrument.
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2/6/11 Primary vs. Secondary Liability Someone with primary liability must pay unless he has a valid defense.
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