TX Commercial Paper
Terms
undefined, object
copy deck
- Two Instruments of Commercial Paper
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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.
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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)
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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
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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
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A person entiteld to enforce the instrument
Bearer: Transfer of Possession
Order: Possession + Indorsement - Types of Indorsements
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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+)
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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)
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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
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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
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Real Defenses(11)
FAIDS -
1.Forgery
2.Fraud in the Factum
3.Alteration
4.Adjuticated Insanity
5.Infancy
6.Illegality
7.Duress (extreme)
8.Discharge in Bankruptcy
9.Discharge known to HDC
10.Statute of Limitations
11.Suretyship - Fraud in the Factum
- Fraud w/o reasonable opportunity to learn of character or essential terms
- Statute of Limitations
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Three Years
- Dishonored Drafts
- Conversion
- Breach of Warranty
- Against Issuers of Certified Checks
Six Years
- Notes
- CDs