Negotiable Instruments Flashcards
(35 cards)
How can the language of a statue be broken down?
Elements; Connectors; Conditions; Quantifiers; Modal Operators
What are the requirements for Negotiability?
Unconditional
promise or order
to pay
A fixed amount of money
With or without interest or other charges
Payable to bearer or order
When first issued or
When first comes into possession of holder
Payable on demand or at a definite time
Without stating any other undertaking or instruction
What is a holder?
The person
in possession of a
NI that is payable
either to bearer or to an identified person that is the person in possession
What is a note?
An instrument that is a promise
What is a draft?
An instrument that is an order
What is a promise?
A written undertaking to pay money signed by the person undertaking to pay
What is an order?
A written instruction to pay money signed by the person giving the instruction
How many people are involved in a note?
Two people: The maker and the payee
How many people are involved in an order?
Three people: The drawer, drawee, and the payee
What creates a conditional promise or order?
- Express condition
- Promises or order is subject to or governed by another writing
- Rights and obligation are in another document
Does the reference to other writing alone create condition?
No, reference alone do not create a condition
What elements do not create conditions?
- References made to another writing for collateral, prepayment, and acceleration rights
- Payment is limited to a particular fund or source
What are the requirements for interest?
Interest may be stated in an instrument as a fixed or variable amount of money or rates.
What is a the courier w/o luggage concept?
An NI cannot state any other undertaking or instruction by the person promising or ordering payment
What are the exception of the courier w/o luggage?
(i) an undertaking or power to give, maintain, or protect collateral to secure payment, (ii) an authorization or power to the holder to confess judgment or realize on or dispose of collateral, or (iii) a waiver of the benefit of any law intended for the advantage or protection of an obligor
A NI is payable on demand if:
- States it is payable on demand
- Indicates it is payable at the will of the holder
- Does not state a time of payment
A NI is payable at a definite time if:
- On elapse of a definite period of time after sight or acceptance
- At time readily ascertainable at the time the instrument is issued
A definite time may be subject to the right of:
- Prepayment
- Acceleration
- Extension at holder’s option
- Extension to a definite time at maker’s or acceptor’s option or automatically upon or after a specified act or event
A NI is payable to a bearer if it:
- States that it is payable to bearer or to order of bearer
- Indicates that it is payable to person possessing the Instrument
- Does not state a payee
- States that it is payable to cash or it not payable to an identified person
A NI is not payable to bearer if payable to:
- The order of an identified person
2. To an identified person or to order
What is the life cycle of an instrument?
- Transfer
2. Negotiation
What is a transfer?
The physical transfer of an instrument (whether or not it is also a technical negotiation) vests in the transferee, whatever rights the transferor had in the instrument
What is a negotiation?
The transfer of instrument so that transferee becomes a holder
What are the requirements for negotiation?
Bearer paper: Transfer of physical possession of instrument
Order paper: Transfer of physical possession and indorsement of instrument
