Flashcards in REG 27 Deck (19):
The or and ee problem
or is the giver, ee is the receiver
or is the actor, ee is the receiver
think donor - donee
think contractor - gives you service, you recieve
think vendor - offer to sell
assignor/transferor of legal right - transferee/assignee receives legal right
mortgagor (you) - mortgagee (bank)
you give the bank the CP (mortgage) - they hold it
way to remember is borrower has to o's and so does mortgagor
lender has to ee's and so does mortgagee
this is confusing because they give money
employer (gives employment contract job) - employee (gets job)
lessor (gives rights to the property) - lessee receives rights to the property
grantor (gives deed that conveys title) - grantee receiving title
offeror (makes an offer to purchase or sell) - offeree (receives an offer to purchase or sell)
counteroffers switch places
vendor (makes an offer to sell) - vendee (makes an offer to buy)
Who is the or/ee and what are they called?
Bank who holds your mortgage
Bank who assigns your mortgage to someone else
Person who offers to sell stuff
Person who advertises their house for sale
Person who makes couteroffer
NFP who receives money
Person who leases apartment
Person who gets deed
What prevents a promissory note from being negotiable?
If note is for performance of services can't negotiate it (i.e., transfer it to someone else for consideration).
What does negotiable refer to?
What is a negotiable instrument (3 things in definition)
1. Evidence of Who
2. Telling someone or self to what
3. To Whom
Negotiable means the right to transfer CP (check, promissory note, etc.) to someone else
A negotiable instrument is:
Has the signature of the maker (or - the giver)
Unconditional promise to pay (or tell someone to pay) a certain sum in cash on demand or
at a specific time
To bearer or specific person (order paper)
Personal versus real defenses?
Real Defenses are FFAAIIDDSS - forgery, fraud, alteration material, adjucated insanity (void), infancy, illegality- void, duress-void, discharge in bankruptcy, suretyship defenses, statute of limitations. Apply to everyone, HDCs
Now the personal are have more to do with common law things that void or make a contract voidable such as: fraud in the inducement, I'm confused here, going to work on below, is there fraud in both categories?
Personal Defenses apply only to those that stand in privity of contract with the party or do not have the rights of an HDC examples
-Don't deliver instrument
- Deliver it but it's incomplete (signature is missing)
-fraud in inducement
-duress or intimidation
- Wrong date for fraudulent purposes
Personal Versus Real Defenses
There's overlap, (both have fraud, duress) - but "real fraud" is lie about the interest
Then it says the personal apply only to someone who is in privity of contract with the maker and not an HDC
HDC takes subject to the real and not the personal defenses. Personal are
1. Lack of consideration
2. Fraud in the inducement
3. Estoppel - You can't deny what you implied by your actions or statements
Real fraud example that works against an HDC: Material alteration the transferor lies about the interest (versus inducement)
Example: You write a check for $100 and the person changes it $1,200, if you are stupid though and leave the amount blank, you are estopped from raising the defense of fraud against an HDC, you're technically
Trying to get the distinction between Real and Personal Defenses.
The HDC takes instrument and only is subject to real defenses.
Personal Are: Fraud in Inducement, No Consideration, Estoppel, Unconsciousability
I guess either side can raise grounds on the above to invalidate contract
Personal is only with the person you are in privity of contract with
Example of Real Fraud versus Fraud in the Inducement: Someone who can't read English signs something that is a promissory note when they were told it was a credit application, that sure sounds like inducement to me, but the example is that it is real fraud, a lie about the instrument itself
Example of personal defense that isn't good against an HDC
Induce by lying about the goods sold in the contract, not the instrument that is being transferred to the HDC
You buy a ring someone has told you has real diamonds and. pay by check. Afterwards you discover it is a fake, your check is now held by a HDC and so you can't stop payment on it, you have to pay.
Personal - Fraud in the inducement means they get you to give them a negotiable instrument by lying about what you are getting versus lying about the commercial paper itself
the distinction is fraud about the negotiable instrument versus fraud about the other stuff the contract was supposed to be about
The latter isn't a good defense against an HDC
You have to know you are signing a negotiable instrument.
Can negotiable notes still be negotiable if it
1. has an extension clause for the date of payment
2. has an acceleration clause that moves the date up in the event of default
3. a person having power of attorney transfers it
If a otherwise negotiable instrument grants an option is it negotiable (e.g., grants an option to buy some land.)
Nope, has to be unconditional promise to pay fixed amount of money. UCC 3-104
Article 3 of UCC is negotiable instruments.
What has to be fixed on a negotiable instrument? Can it be paid out of a designated fund or source
The amount of money has to be fixed, not the source, specifying the source doesn't change an unconditional promise to pay to a conditional promise.
In addition to the amount of money, what is the other condition a instrument has to meet to make it negotiable.
has to be payabable on demand, at a definite time or be silent on the date
though you can have a clause to change the date
if it doesn't give a payment date, it's treated as payable on demand
Is the issue date required on the face of a negotiable instrument.
No it says, but what happens if it says "payable 30 days from today?" - just saw in next question that if it says that it has to be dated
It's the unconditional promise to pay and the fixed amount of money, no so much the date apparently.
If the note says 1 year from - what can it be one year from to be negotiable instrument.
Has to be from another date, not an event, such as 1 year from a person's marriage.
Oh....what makes a note negotiable as far as the "payable to order or bearer" is the language strict?
It has to say "Pay to the order of" it can't say I promise to pay Bill, the bearer
Pay who Bill orders me to pay - guess what it's not that
Fuck them honestly, next question says, "under the UCC the language needed may vary considerably" "requirement that the instrument be payable to order or to bearer" yet this exact language can be ommitted"
Apparently it can't be too strict?
Negotiabile Instruments - What part of UCC
Mainly article 3, but can also be doucument of title of an investment security which are covered under separte articldes
Does payee have to sign to make it negotiable?
Does date of issue have to be there to make it negotiable?
Does payment have to be in an authorized medium of exchange (legal speak for money)
No, not the payee, but may have to if want to negotiate it
No, date of issue not required
YEs, it has to be in money