Chapters 8 - 9 Notes.docx

Presentment the act of making a demand for the drawee

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Presentment, the act of making a demand for the drawee to pay. Maker, a person who has promised to pay a set sum to the holder of a promissory note or certificate of deposit. Acceptor, a person (drawee) who accepts and signs a draft to agree to pay the draft when it is presented. Endorser, one who issues an endorsement. Drawer, the party that writes an order or the person who writes a check. Ratify, to approve an unauthorized agent’s signature on an instrument.
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Imposter rule, a rule that holds that if one obtains a negotiable instrument by impersonating another and endorses it with the impersonated party’s signature, the loss falls on the drawer of the instrument. Fictitious payee, someone have no right to payment. The UCC fictitious-payee rule governs the liability of companies and their endorsed checks: Any check made out to a fictitious payee and endorsed must be honored and is not considered a forgery. Avoiding liability for negotiable instruments: o Defenses to liability: The arguments for why a party should not be held liable for an instrument include: Real (universal) defenses Real defense, a liability defense that applies universally to all parties A party’s right to enforce a negotiable instrument is subject to the following real defenses: o Infancy (being below the legal age of consent), to the extent that it makes a contract void o Duress, to the extent that it makes a contract void o Lack of legal capacity, to the extent that it makes a contract void o Illegality of the transaction, to the extent that it makes a contract void o Fraud in the factum o Discharge through insolvency proceedings (bankruptcy) o Forgery o Material alteration Personal defenses o Discharge of liability: Release from liability can occur through: Discharge by payment or tender of payment Discharge by cancellation or renunciation Discharge by reacquisition Discharge by impairment of recourse A right to recourse is the ability of a party to seek reimbursement. Discharge by impairment of collateral Fraud in the factum, a liability defense available to a party who signs a negotiable instrument without knowing that it is a negotiable instrument Website Notes – Is money evil? “Money is the root of all evil.” This distortion of 1Timothy 6:10 is often heard, particularly in times of financial distress such as the recent global financial crisis. The Apostle Paul actually wrote, “For the love of money is a root of all sorts of evil, and some by longing for it have wandered away from the faith and pierced themselves with many griefs.” (NASB) Thus, rightly understood, money is neither the root of all evil nor is it fundamentally evil in and of itself. Greed is evil—the concept of money is not.
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  • Fall '12
  • L
  • Cheque, Negotiable instrument, holder, Forgery

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