This site is 100% ad supported. Please add an exception to adblock for this site.

TX Commercial Paper


undefined, object
copy deck
Two Instruments of Commercial Paper
1. Note
2. Draft
Note, Definintion
A promise to pay. Two parties are the maker and payee.
Draft, Defintion
An order to pay. The drawer orders the drawee to pay the payee.
Negotiable Instrument,
Defintion (6)
1. a signed writing
2. unconditional promise or order
3. pay a fixed amount of money
4. payable to order or bearer
5. on demand or at a definate time
6. no other undertaking
Signature, Defintion
Any mark with intent to authenticate
A promise is not conditional simply because it: (3)
1. refers to another writing
2. limits payment to a particular source
3. requires a countersignature
Payable in a Fixed Amount of Money means...
Principal must be determined by reference to the instrument alone
No other undertaking or instruction...
Nickname and Exceptions(3)
Courier without luggage requirement mandates no other promises or orders EXCEPT:
- give, mainatin or protect collateral
- confession of judgment
- waiver of the benefit of law protects to obligor
Holder, Defintion and Requriements Order/Bearer
A person entiteld to enforce the instrument
Bearer: Transfer of Possession
Order: Possession + Indorsement
Types of Indorsements
1. Special Indorsement
2. Blank Indorsement
3. Qualified Indorsement
4. Unqualified Indorsement
5. Restrictive Indorsement
6. Unrestrictive Indorsement
Holder in Due Course,
Definition (4)
1. Holder
2. For Value
3. In Good Faith
4. Without Notice
Value (3+)
1. Consideration
2. Prior Debt
3. Lein or Security Interest in Instrument
NOT: Executory Promise
Banks take for Value, using what test?
First In First Out Test
Good Faith, Defintion
Honesty in Fact (subjective) and in observance of reasonable commercial standards (objective)
Without Notice Of Irfirmities
(moment of giving value)
- forged or altered
- irregular or incomplete
- dishonored or overdue
- claim to the instrument
- notice of defenses or claims in recoupment
Shelter Rule
With the exception of fraud or illegality,the transfer vests all the rights ofthe transferor
Denial of HDC Status
Even if All Elements Met
1. Taking over estate
2. Purchase in execution, bankrkuptcy or creditor sale
3. Bulk transaction sale.
Rights of a Holder in Due Couse
HDC takes free from personal defenses, subject only to real defenses
Real Defenses(11)
2.Fraud in the Factum
4.Adjuticated Insanity
7.Duress (extreme)
8.Discharge in Bankruptcy
9.Discharge known to HDC
10.Statute of Limitations
Fraud in the Factum
Fraud w/o reasonable opportunity to learn of character or essential terms
Statute of Limitations
Three Years
- Dishonored Drafts
- Conversion
- Breach of Warranty
- Against Issuers of Certified Checks
Six Years
- Notes
- CDs

Deck Info