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Flashcards in General Deck (4):
1

Approach

1) Identify TYPE of paper

2) Identify PARTIES

3) Determine if INSTRUMENT is NEGOTIABLE

4) Determine if INSTRUMENT was PROPERLY negotiated

5) Determine if TRANSFEREE is a HOLDER in DUE COURSE (HDC)

6) Determine P CAUSE of ACTION such as contract, warrant, tort, or no properly payable.

7) Determine D's DEFENSES

8) If D is held liable, may D PASS LIABILITY on to another party.

2

Alteration

Not properly Payable

General Rule:
* An altered check is not properly payable, and bank needs to recredit.

Except:
1) Negligence

2) Bank Statement Rule

3

Alteration

Effect on Holder in Due Course

Change in Obligation
* HDC may enforce the original amount

Unauthorized Completion
* HDC may enforce full

4

Alteration

Effect on NON holder in Due Course

Fraudulent made by holder = total dishonor of obligor

Non fraudulent made = obligor liable under original contact.