Instruments and Parties

Question 1

Approach to question

Answer 1

1. Identify type of instrument
2. Identify parties (diagram)
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 if Plaintiff’s cause of action such as contract (indorsement), warranty, tort or if the instrument is not properly payable
7. Determine Defendant’s defenses and rights

Question 2

Note

Answer 2

Two-party commercial paper where the maker promises to pay money to the payee or to bearer

Question 3

Check (draft)

Answer 3

Three-party commercial paper where the drawer orders the drawee (payor bank) to pay a payee

Question 4

Certified check

Answer 4

Ordinary check which bank has accepted it (agreed to pay)

Question 5

Cashier’s check

Answer 5

Drawer and drawee are the bank. Person buying the check is the customer

Question 6

Remotely Created Item

Answer 6

A draft not signed by drawer, but created with drawer’s authorization so that a third party may be paid from drawer’s bank account. Usually telephone/internet transactions