lecture notes ch. 25

lecture notes ch. 25 - Chapter25 Title:BusLawSeal.eps...

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

View Full Document Right Arrow Icon
Chapter 25 Transferability and Holder in Due Course C HAPTER O UTLINE I. Negotiation When a transfer is by negotiation, the transferee can become a holder in due course and acquire greater  rights than the transferor had [UCC 3–203(b), 3–305]. A. N EGOTIATING O RDER I NSTRUMENTS An order instrument is negotiated by delivery with any necessary indorsements. B. N EGOTIATING B EARER I NSTRUMENTS A bearer instrument is negotiated by delivery alone. II. Indorsements Generally, by indorsing, an indorser promises to pay the holder or any subsequent indorser the amount  of the instrument if the drawer or maker defaults [UCC 3–415(b)].   An instrument is most often  indorsed on the back, but if there is no room, an indorsement can be written on a separate piece of  paper (an allonge) “firmly affixed” to the instrument [UCC 3–204(a)]. A. B LANK I NDORSEMENTS 127
Background image of page 1

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

View Full DocumentRight Arrow Icon
128           INSTRUCTOR’S MANUAL TO ACCOMPANY  BUSINESS LAW , ELEVENTH EDITION A   blank indorsement specifies no particular indorsee and can be a mere signature [UCC 3– 205(b)]. B. S PECIAL I NDORSEMENTS special indorsement names the indorsee [UCC 3–205(a)]. An instrument indorsed in this  way is an order instrument. A blank indorsement converted to a special indorsement converts a  bearer instrument into an order instrument. C. Q UALIFIED I NDORSEMENTS Most indorsements are unqualified. A  qualified indorsement  disclaims an indorser’s liability. 1. The Effect of Qualified Indorsements The notation “without recourse” is commonly used, often by persons acting in a  representative capacity. 2. Special v. Blank Qualified Indorsements A qualified indorsement is accompanied by a special or blank indorsement that determines  further negotiation. D. R ESTRICTIVE I NDORSEMENTS Restrictive indorsements  require indorsees to comply with certain instructions. 1. Indorsements Prohibiting Further Negotiation An  indorsement prohibiting further indorsement  does not affect negotiation but has  the same effect as a special indorsement [UCC 3–206(a)]. 2. Conditional Indorsements A   conditional indorsement   conditions payment on the occurrence of a specified event  [UCC 3–205(a)].   (A person paying or taking for value the instrument can disregard the  condition without liability [UCC 3–206(b)].) 3. Indorsements for Deposit or Collection An   indorsement for deposit or collection   makes the indorsee the indorser’s col- lecting agent. 4. Trust (Agency) Indorsements Indorsements that state they are for the benefit of the indorser or a third person are  trust indorsements , and legal title vests in the original indorsee. To the extent that the original  indorsee pays or applies the proceeds consistently with the indorsement, the indorsee is a  holder and can become a holder in due course [UCC 3–206(d), (e)].
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.

This note was uploaded on 09/05/2011 for the course LAW 3000 taught by Professor Ms.zarac.sette during the Spring '11 term at Hawaii Pacific.

Page1 / 14

lecture notes ch. 25 - Chapter25 Title:BusLawSeal.eps...

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