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62 Cards in this Set
- Front
- Back
An instrument is blank when it is transferred from one person to another in such manner as to constitute the transferee the holder thereof |
Negotiated |
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If payable to bearer, it is negotiated by |
Delivery |
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If payable to order, it is negotiated by |
The indorsement of the holder completed by delivery |
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Methods of transfer of a negotiable instrument |
Issue Negotiation Assignment |
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First delivery of the instrument complete in form, to a person who takes it as a holder |
Issue |
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First transfer of an instrument to a payee |
Issue |
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Operates to make the transferee of a negotiable instrument the holder thereof |
Negotiation |
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Ordinarily involves indorsement so that blank and indorsement are often used interchangeably |
Negotiation |
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Involves a transfer of rights under a contract |
Assignment |
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Transfer of non negotiable instrument always constitute a blank |
Assignment |
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The word blank is also used when referring to assignment |
Transfer |
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When a negotiation takes place, the transferee becomes a blank |
Holder |
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Transfer of a negotiable instrument from one person to another made in such a manner as to constitute the transferee the holder thereof |
Negotiation |
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There is blank if the transfer does not make the transferee the holder of the instrument |
No negotiation |
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Methods of negotiation |
Instruments payable to order Instruments payable to bearer |
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An indorsement by the payee or present holder and the delivery to the next holder are the two steps for the negotiation |
Instruments payable to order |
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It is negotiated by mere delivery alone without indorsement |
Instruments payable to bearer |
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Person in possession of a bill or note |
Bearer |
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Transfer of possession, actual or constructive from one person to another |
Delivery |
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Payee or indorsee of a bill or note who is in possession of it or the bearer thereof |
Holder |
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The payment of a check or other bill by the DRAWEE BANK is not a negotiation and does not make the bank a holder |
True |
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Transfer if the title to an instrument with the assignee generally taking only such title or tights as his assigning has, subject to all defenses available against his assignor |
Assignment |
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May either be negotiated or assigned |
Negotiable instrument |
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Can only be assigned or transferred |
Non-negotiable instrument |
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Refers only to negotiable instrument |
Negotiation |
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Refers generally to an ordinary contract |
Assignment |
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In negotiation, the transferee is a blank |
Holder |
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In assignment, the transferee is a blank |
Assignee |
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Subject only to real defenses |
Holder in due course |
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Subject to both real and personal defenses |
Assignee |
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Warrants the solvency of prior parties |
General indorser |
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Does not warrant the solvency of prior parties unless expressly stipulated or the insolvency is known to him |
Assignor |
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Not liable unless there be presentment and notice of dishonor |
Indorser |
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Liable even without notice of dishonor |
Assignor |
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The signature of the indorser without additional words, is not a sufficient indorsement |
False |
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Writing of the name of the payee on the instrument with the intent either to transfer the title to the same or to strengthen the security of the holder by assuming a contingent liability for its future payment, or both |
Indorsement |
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The payee by signing the instrument and delivering it to another person |
Indorser |
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The person who receives the indorsed instrument |
Indorsee |
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Essential to the execution of an instrument payable to the order of the maker or drawer |
Indorsement |
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Does not make a negotiation a mere assignment |
Assign |
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Indorsement requiring only the signature of the indorser without additional words is |
Blank indorsement |
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Where the name of the indorsee is specified |
Special indorsement |
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Indorsement is derived from the Latin word blank |
Indorsa |
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Where the indorsement is on a slip of paper physically attached to the instrument so as to become part of it, the paper is known as |
Allonge |
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Indorsement must be of entire instrument |
True |
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Indorsement to multiple payees or indorsees |
Joint payees Alternative payees |
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An indorsement purporting to transfer the instrument to two or more persons generally does not operate as a negotiation of the instrument for again the causes of action is split or divided |
Joint payees |
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Indorsement as to methods of negotiation |
Special Blank |
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Indorsement as to kind of title transferred |
Restrictive Non-restrictive |
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Indorsement as to scope of liability of indorser |
Qualified Unqualified or general |
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Indorsement as to presence or absence of limitations |
Conditional Unconditional |
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Indorsement as to the other kinds of indorsement |
Joint Successive Irregular or anomalous Facultative |
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Specifies the person to whom or to whose order the instrument is to be payable and the indorsement of such indorsee is necessary to the further negotiation of the instrument |
Special indorsement |
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Specifies no indorsee and an instrument so indorsed is payable to bearer and may be negotiated by delivery |
Blank ndorsement |
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Restrictive indorsement |
1. Prohibits further negotiation 2. Constitutes indorsee agent of indorser 3. Vests title in indorsee for the benefit of the indorser or a third party |
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Constitutes the indorser a mere assignee of the title of the instrument |
Qualified instrument |
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Means a resort to a person who is secondarily liable after the default of the person who is primarily liable |
Recourse |
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Effects of qualified indorsement |
1. Indorser, a mere assignor 2. Minister's liability limited 3. Negotiability of instrument not affected |
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Transfer title without guaranteeing payment |
Qualified indorsement |
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A party required to pay the instrument may disregard the condition and make payment to the indorsee or his transferee whether the condition has been fulfilled or not |
Conditional indorsement |
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One by which the indorser binds himself to pay upon no other condition than the failure of prior parties to do so and of dye notice to him of such failure |
Absolute indorsement |
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One by which the indorser imposes some other condition to his liability or on the indorsee's right to collect the proceeds of the instrument |
Conditional indorsement |