Module 28 Cards.txt

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Author:
mrgonz
ID:
192394
Filename:
Module 28 Cards.txt
Updated:
2013-01-12 13:44:59
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YAEGER REG Mod 28
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YAEGER REG Mod 28
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  1. Types of commercial paper:
    • - Promissory note (promise to pay)
    • - Certificate of Deposit (also a type of promissory note)
    • - Drafts (checks, order a 3rd party to pay someone)
    • - Trade acceptance
    • - Investment Securities (stock & bonds) & Documents of Title - NOT COMMERCIAL PAPER, but follow the same rules
  2. In a Trade Acceptance, the liable parties are:
    • - Seller, who is both the drawer and payee, is secondarily liable.
    • - Buyer, who accepts by signing in lower left hand corner, is primarily liable.
  3. 5 Elements of Negotiability for CP (SUMBOD):
    • - Signed
    • - Unconditional promise or order
    • - Money
    • - payable to Bearer or to Order
    • - payable on Demand or at a Definite time
  4. When CP is payable to "bearer", who may cash the CP?
    - Anyone
  5. In order to negotiate "order" paper, it must have an:
    - Endorsement on the back side
  6. For bearer paper to be negotiable, it needs to be:
    - Delivered
  7. For order paper to be negotiable, it must be:
    - Delivered and endorsed
  8. All endorsements are either:
    - Blank or Special endorsements
  9. A blank endorsement means that:
    - The new payee is not mentioned, and always makes CP bear paper
  10. A special endorsement means:
    - The endorsement names a new payee and makes CP order paper
  11. To place a qualified endorsement on CP, one must add:
    • - "Without Recourse"
    • - Means there is no guarantee of payment to future endorsers
    • - Still has warranty liability
  12. To place a restrictive endorsement on CP, one must add:
    - For deposit only or For collection only
  13. Contract liability is:
    - A guarantee of payment
  14. The only parties that have contract liability are:
    - Those who sign CP paper
  15. The primary liable parties for CP are always:
    • - Makers of the notes
    • - Drawees of drafts
  16. Secondarily liable parties for CP include:
    • - Drawers
    • - Endorsers (except qualified endorser)
  17. Warranty liability is:
    - Liability from transferring CP
  18. 5 warrantees from transferring commercial paper:
    • - Good title
    • - All signatures are genuine
    • - Instrument not materially altered
    • - No insolvency proceeding against issuer
    • - No defense is good against them
  19. Requirements to be a holder of CP:
    • - For bearer paper, mere possession
    • - For order paper, possession and proper endorsement
  20. Requirements to be a holder in due course of CP:
    • - Must be a holder of a negotiable instrument
    • - Give present value
    • - Must have good faith
    • - Without notice of problems or defenses
  21. HIDC takes free of personal defenses, but loses to:
    - Real defenses
  22. Personal Defenses still make original user liable to HIDC, which include:
    • - Breach of contract
    • - Fraud in inducement
    • - Lack of consideration
  23. Real defenses that beat HIDC are (IM BIFF):
    • - Infancy
    • - Material alterations
    • - Bankrupcy
    • - adjudicated Insanity or Illegality, or anything that would make a contract void
    • - Fraud in the execution
    • - Forgery
  24. A Holder under holder in due course (HUHIDC) is someone who:
    - Took a negotiable instrument from a HIDC
  25. Two types of documents of title:
    • - Warehouse receipts
    • - Bill of lading
  26. A document of title is negotiable if:
    - by its terms, goods are to be delivered to the bearer or the order of named party
  27. 3 warranties made by transferors of negotiable documents of title:
    • - Genuine
    • - Effective and rightful transfer
    • - Transferor had no knowledge of facts that would impair validity of title
  28. Rights and liabilities of warehousers and carries include:
    • - may limit liability by contract
    • - liable for ordinary negligence for lack of due care
    • - both liable for misdelivery of goods to a good faith purchaser
    • - warehousers not strictly liable (but common carriers are)
    • - they may commingle fungible goods (goods in which any unit is treated as the equivalent of other unit)
    • - both have a lien for charges and expenses on goods in their possessions

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