Exam 25: Transfer and Holder in Due Course

The courts will never presume a negotiation of order paper was intended; the parties must clearly indicate a negotiation or else the courts will presume an assignment was intended.

David makes and delivers a promissory note for $500 to the order of Kerry, who indorses the note and delivers it to Stan in payment of an outstanding debt Kerry owes him. Stan has given value as far as the Code requirements for a holder in due course.

The shelter rule did not exist at common law.

An indorsement in trust creates a trust for the benefit of the indorser or others.

Marty Sandidge wrote a check payable to "Charles Saxon" when the payee's real name was spelled "Charles Saxton." In order to obtain payment, Charles:

Time paper that states it is due on July 1, which is a Sunday, is overdue on:

Jennifer, who stole a check "payable to cash," cannot be a holder since she did not receive possession by voluntary transfer.

Ricardo is the holder of a check that contains the indorsement "Without Recourse, (signed) Mary Roberts." This indorsement:

Jill issues a negotiable promissory note to Cherice, who indorses it and delivers it to Lee. If Lee knows that the note was given to Cherice in exchange for worthless securities, Lee cannot be a holder in due course.

If a person paying an instrument subject to the impostor rule fails to exercise ordinary care, the issuer may recover from the payor to the extent the payor's negligence contributed to the loss.

Cyrus takes a $700 check to Wheeling State Bank, where he asks for $100 in cash back and he deposits the remaining balance of $600. Wheeling State Bank has "given value" t o the extent of $100 according to the requirements of holder in due course status.

Real defenses include all but: