Exam 29: Liability of the Parties Under Negotiable Instruments

Instruments may be negotiated even if it is overdue.

The close-connection doctrine applies in circumstances that indicate there may be a problem with the instrument.

A holder becomes a holder in due course if they meet all the following requirements except:

Fraud in factum:

Manuel sued Patricia on a promissory note. Patricia admitted signing the note, but raised the defense that Manuel was not a holder in due course. Can Manuel recover without proving that he is a holder in due course?

Presentment occurs when the primary party refuses to pay an instrument according to its terms.

Fraud in the inducement is a:

For a change to constitute an alteration, the person making the change must be a party to the instrument.

If a holder learns of a defense after acquiring an instrument, the knowledge works retroactively to destroy the holder's character as a holder in due course.

A person who acquires a negotiable instrument with notice of a defense:

A taker of an instrument who is a holder in due course at the time of the transfer, but who thereafter learns of a defense:

The FTC rule, which provides that a notice provision must be included in all consumer credit contracts, requires that the notice:

A holder through a holder in due course:

An instrument is said to "run" to a holder if it contains any of the following attributes, except:

A universal defense is so basic that the social interest in preserving them outweighs the social interest of giving negotiable instruments the freely transferable qualities of money.

To have the status of a holder in due course, a person must first be a holder.

A(n) __________ is an unauthorized change or completion of a negotiable instrument designed to modify the obligation of a party to the instrument.

A holder can recover from any of the parties who are liable on the instrument, regardless of the order of the signatures on the instrument.

A holder is on notice that an instrument is defective when the holder:

A holder who is neither a holder in due course nor a holder through a holder in due course is subject to every defense, just as though the instrument were not negotiable.