Unit 4 - 1 Section 3-302(a HDC in his/her own rights Pg a50...

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04/28/2009 1. Section 3-302(a) – HDC in his/her own rights. Pg. a50 2. Section 3-203(B) the Shelter Provision [Pg. a60 section 3-203(b)] transfer of an instrument gives the assignee all the rights. It tells us that if D cannot qualify as a HDC under section 3-203(a) he could still qualify under the Shelter Provision if C had those rights. Whatever rights the transferor had is given to the transferee, but assignee cannot obtain HDC rights if D performed/participated in fraud or illegality. If D knew that A was messing with B, D could still be a HDC under the shelter provision because he got the rights from C. 3. Real Defenses- found in Section 3-305(aI) Pg. a60 a. Forgery b. Material Alteration c. A defense on the obligor based on infancy; infancy is a dense to a simple contract. d. Duress, lack of legal capacity, _____ which under other law (contract law) nullifies the obligation of the obligor. If that obligation was nullified from the get go the contract was void. i. Duress- with most duress the contract is voidable, but in some cases (like the victim being drugged) the contract could be void. ii. If a contract involves illegal performance the contract is void. iii. Lack of legal capacity- if minor contract is voidable. In adults lack of capacity the contract (lack of contractual ability) voidable. With a guardian, if the ward makes a contract then it the contract is void. e. Fraud that induced the obligor to sign the instrument without knowledge or ability to learn of it- fraud in the inducement the contract is voidable. Fraud in the inception (execution) makes a contract void. f. Discharge of the obligor in insolvency 4. A land transaction. The buyer signs a note to seller, and the seller sells the note to C who is a HDC, then any defenses A(buyer) could have against B(seller) then A(buyer) does not have them against C(HDC). a. These instruments are used in commerce as a substitute for money (cash) 5. Primary and Secondary liability a. Primary liability- if we’re talking about a check, who has primary liability? The drawee has primary liability upon acceptance of the draft. This liability does not
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apply unless the draft is accepted, meaning that the nature of the liability on the drawer is secondary liability. b. Secondary liability- Means liability of a guarantor/drawer. Secondary liability also applies to an unqualified endorser; barrer paper. How is barrrer paper negotiable? By delivery (the only element necessary). If paper is order paper (payable to someone) which means that for B to negotiate to C it is twice as hard, because there must be delivery and endorsement (is when B signs the back of the instrument, and gives it to
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This note was uploaded on 04/23/2011 for the course BLAW 3311 taught by Professor Boykin during the Spring '07 term at UT Arlington.

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Unit 4 - 1 Section 3-302(a HDC in his/her own rights Pg a50...

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