Exam 25: Transfer and 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.

An indorsement "Pay Alice Adams" is an assignment rather than a negotiation since it lacks words of negotiability.

Tina forges Vivian's indorsement on a promissory note and negotiates it to Ned.If Vivian subsequently ratifies Tina's act,both Tina and Vivian are liable to Ned on the note and Vivian's ratification relieves Tina from civil liability to Vivian.

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:

A restrictive indorsement:

Carmen needs quick cash,so she thinks of a scheme.She tells Frank she is collecting for Laotian refugees.Frank writes a check for $100 payable to the order of Carmen.Carmen indorses the check and delivers it to Pete,who doesn't know of Carmen's scam,for $90 cash.Pete gives the check to Emily as a present.Frank discovers Carmen's deception and refuses to pay Emily.Will he win?

A negotiation is void if the transaction in which it occurs is void.

Lily drew a check on First Bank payable to Shelley.Lily signed the check in the normal place at the bottom,right side of the check.Glenn signed the check at the bottom left of the front of the check.In what capacity will the Code interpret Glenn to have signed? Will Glenn be able to introduce parol evidence to establish his intent?

Indorsements with ineffective restrictions include which of the following?

Vicki,a bookkeeper for Emilio Enterprises,steals some of the checks she is supposed to post to her employer's account.She forges her employer's indorsement.The indorsement is:

An indorsement "Pay to Jones Construction Company upon completion of the job at No.10 Park Place" is ineffective under Revised Article 3; the indorsee can enforce the instrument.

Identify the type of indorsement each of the following represents. a.Pay to Bill, for collection. b.Pay to the order of The American Bank for deposit only. c.Pay to Albert, without recourse. d.John Smith.

Any transfer for value of an instrument is a negotiation.

A person can be a holder if:

One who is in possession of a negotiable instrument that is drawn,issued,or indorsed to him or to his order or that is indorsed in blank is a(n):

Sharp Finance Company has furnished Keith with some pre-printed forms for customers to sign to finance repairs on their homes.After the customers sign the notes naming Keith as the payee,he sells them to Sharp Finance.Sometimes Keith is busy and does a poor job on the homes so he can get on to the next job.When customers complain,he says he'll get around to fixing the problems.If the customers don't pay the note,Sharp Finance sues them.Can the customers use the defenses they have against Keith against Sharp?

Whether a transfer is by assignment or by negotiation,the transferee does not acquire the rights the transferor had.

Assuming a note made by Barbara payable to Carol,which indorsement will limit negotiability?

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

Real defenses include all but: