UCC 3 Flashcards

Question

What does UCC 3-403 say regarding signatures?

Answer 1

Person is not liable on an instrument unless he or she signs it person’s name is signed without authority, the signature is unauthorized Multiple signatures: - Account requires more than one person to sign to constitute the authorized signature - Unauthorized if one of the required signatures is lacking

Answer 2

Date - if blank, date is assumed to be date when issued, Amount - should appear in numbers and words, Payee - if blank is considered a bearer instrument, Drawers signature - authorization for paying bank the (Drawee) to disburse funds.

Answer 3

Result of the transfer of possession of an instrument, whether voluntary or involuntary: – By person other than the issuer – To a person who becomes its holder Example: Payee deposits check, depository bank now holder in due course as result of transfer.

Answer 4

From holder to person/bank who becomes entitled to enforce the instrument * Transfer occurs when delivered by a person other than issuer, with the intent of granting the right to enforce the instrument

Answer 5

Per UCC 1-201 - Person in possession of a negotiable instrument that is payable either to bearer or to the identified person in possession

Answer 6

Depositary Bank becomes holder of item at time it receives the item for collection: If the customer was holder of the item at time of delivery to the bank Whether or NOT customer indorses the item

Answer 7

Depositary Bank warrants AMOUNT of the item was paid to the customer or deposited to the customer's account

Answer 8

Holder who has possession, that: 1 Took the item in good faith. 2 Took item for value 3 Without notice the item is overdue or has been dishonored 4 Without notice signature was unauthorized or altered. 5 Without knowledge of claims against it.

Answer 9

UCC 3-302 Instrument that is a check and is payable on demand is considered overdue the later of: * Day after the day demand for payment is made; or * 90 days after its dat

Answer 10

Can enforce item against Drawer * Can make a claim to the person who signed the check and ordered payment (Drawer) * Even if that check was returned unpaid by the Drawer’s bank (Paying Bank) * Financial intermediary, such as Depositary Bank (BOFD) or Collecting Bank should not be affected by disputes between the Drawer and Payee of check regarding the underlying transaction

Answer 11

a holder in due course can be an example such as person a sells widget, person b buys it and gives person a check. Person a gives the check to their friend. person b realizes widet is fraudulent and places a stop payment. friend is holder in due course and can sue...

Answer 12

RDC issues: customer deposits check both via RDC and at a third party check cashing facility. The checking cashing facility has HDC rights. Duplicate issues: Cause by outside banking system by customer not a depository fi. Warranty for no double debit: Cover HDC duplicate warranty claims:

Answer 13

Signature alone or accompanied by other words for purpose of negotiating the instrument (cashing or depositing a check)

Answer 14

Signature of the Payee John D Doe (check payable to john doe)

Answer 15

signs check and names party to whom rights are transferred Pay to the order of Jane Doe, John D Doe (check payable to john doe)

Answer 16

Payee signs check and imposes limitations on transfer For deposit only John D Doe (check payable to john doe)

Answer 17

made by a person who is not the holder of the instrument John doe sr (check payable to John Doe Jr. )

Answer 18

UCC 3-405 Two categories of fraudulent indorsements made by employees Indorsement made in name of employer on an instrument (check) that is payable to the employer; Indorsement made in name of Payee on instrument (check) that was issued by employer

Answer 19

Employee of company (or one acting in concert with the employee) makes a fraudulent indorsement Checks written, stamped or deposited fraudulently using the company’s account oEmployee was entrusted with responsibility for checks by that employer * Bank was not negligent * Employer is liable – not the Paying Bank

Answer 20

Paying Bank Rule of Price v. Neal case. UCC 3-417

Answer 21

UCC 3-501 Demand for payment made to Drawee – Made by/on behalf of person entitled to enforce instrument Location of presentment: presentment made at a place of payment by any commercially reasonable means: oral, written, or electronic communication Effective when: Deman for payment is received by drawee Provide instrument to drawee: Unless otherwise agreed by the parties such as electronic presentment Drawee may return or refuse without dishonoring: Return for lack of necessary indorsement or Refuse payment for failure to presentment to comply with terms of instrument, agreement of parties, or other applicable laws Timing of presentment: Drawee may establish cut-off hour * Presentment may be considered as next business day after day of presentment if items presented after cut-off hour

Answer 22

Return or pay timing (UCC and Reg CC timing) - May pay a properly payable item (authorized by customer under agreement with bank)

Answer 23

UCC midnight deadline; and - Reg CC expeditious return requirement

Answer 24

Item is finally paid when Paying Bank has: - Paid item in cash - Settled for item without a right to revoke settlement - Made provisional settlement but didn’t revoke in time

Answer 25

Timing/manner of settlement by statute and as agreed upon based on clearing-house rule or agreement - Once item is considered presented, bank may also charge the customer’s account - In accordance with the terms of their agreement and in compliance with laws

UCC 3 Flashcards

(49 cards)