Essentials Of Business Law Chapter 20 Transfer And Discharge Of Commercial Paper McGraw-Hill/Irwin...
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Transcript of Essentials Of Business Law Chapter 20 Transfer And Discharge Of Commercial Paper McGraw-Hill/Irwin...
Essentials Of Business Law
Chapter 20
Transfer And Discharge Of Commercial Paper
McGraw-Hill/Irwin Copyright © 2007 The McGraw-Hill Companies, Inc. All rights reserved.
Essentials of Business Law Chapter 20-2
Indorsing Commercial Paper
Indorsement The holder of commercial paper signs his or her name
on the back of the instrument Transfers ownership of the instrument to another Transferee becomes the new holder
Indorser The person who signs his or her name on it
Indorsee The person to whom the instrument is transferred
Indorsement must be written for the entire amount stated in the instrument
Essentials of Business Law Chapter 20-3
Types Of Indorsements
Blank indorsement The name of the payee is written by the payee on the
back of a negotiable instrument Special indorsement The payee specifies the person to whom it is to be
paid Restrictive indorsement A signature to which words have been added
restricting the further indorsement of the instrument Qualified indorsement The indorser avoids liability for payment even if the
maker or drawer defaults on the instrument
Essentials of Business Law Chapter 20-4
Holder In Due Course
A holder in due course takes commercial paper: In good faith and for value Before maturity Without actual or constructive notice of any
defects in the instrument
Essentials of Business Law Chapter 20-5
Holder In Due Course
To be a holder in due course, the commercial paper must: Be complete and regular on its face Have been acquired on or before the due date Have been acquired for a valuable
consideration Have been taken in good faith and for value
Essentials of Business Law Chapter 20-6
Defenses Against Payment Of Commercial Paper
Personal defense Defense against payment of commercial paper May be used against any party except a holder in due
course Relate to the acts or circumstances leading to the
issue of the paper
Real defense Defense against payment of commercial paper Claims the instrument was void from the beginning May be used by the maker or drawer against any
party to a paper, including a holder in due course
Essentials of Business Law Chapter 20-7
Personal Defenses
Lack of considerationFraudDuressUndue influenceNon-delivery of an incomplete instrumentNon-delivery of a completed instrumentPayment before maturityCounterclaim
Essentials of Business Law Chapter 20-8
Real Defenses
Forgery
Material alteration
Lack of intent to execute commercial paper
Incapacity of the parties to contract
Illegality created by law
Essentials of Business Law Chapter 20-9
Presentment
Tender a note to the maker and demand its paymentShow a draft or check to the drawer and request its acceptance or paymentPresentment may be made by: Mail At the place of acceptance of payment specified in the
instrumentMust be presented for payment during business hours on the due date A demand instrument must be presented for payment
within a reasonable time after the date of issue
Essentials of Business Law Chapter 20-10
Dishonor Of Commercial Paper
A negotiable instrument is considered dishonored if: Is not accepted when presented Is not paid when presented for payment at maturity Presentment is excused or waived and the instrument
is past due and unpaid
The holder of dishonored commercial paper must give notice of the dishonor immediately Any drawer or indorser to whom such notice is not
given is relieved from liability