Commercial Paper (Neg. Instruments)

Question 1

What is a negotiable instrument?

Answer 1

Def: (1) A writing (2) signed by maker/drawer containing (3) an unconditional promise or order to pay a fixed amount in money (4) on demand or at a definite time (5) to order or bearer (6) containing no other undertaking or instruction.

Question 2

Define HDC

Answer 2

(1) A “Holder” is a person who is negotiated a negotiable instrument.

(2) “Due course” requires:

1. Holder is negotiates for value,
2. Negotiates in good faith (i.e., honest in fact & reasonable commercial standards), and
3. With no notice.

Question 3

What is special about being a HDC?

Answer 3

An HDC can enforce the instrument against the maker/drawer subject only to her real defenses; takes free of personal defenses.

Real defenses include: forgery, fraud in the execution, alteration, adjudicated incompetency, infancy, illegality, duress, discharge, SOL, suretyship.

Personal defenses include: failure of consideration, fraud in the inducement, waiver, estoppel, and payment