Commercial Paper (bar exam)

you have possession and are entitled to enforce it

1) unconditional (does not state a condition for payment and is not subject to or governed by another writing) 2) promise (note) or order (draft) to pay (written and signed) 3) a fixed amount of money (with or without interest) that: (i) is payable TO ORDER OR BEARER; (ii) is payable ON DEMAND OR AT A DEFINITE TIME; AND (iii) STATES NO UNAUTHORIZED UNDERTAKING OR INSTRUCTION by the person promising or ordering payment

i) it EXPRESSLY STATES A CONDITION for payment, OR ii) it states that the promise or order is SUBJECT TO OR GOVERNED BY another writing

payable to the order of an identified person ("pay to the order of Becky") or to an identified person or order ("pay to Becky or her order")

an instrument is payable to bearer if it: i) states that it is payable to bearer ("I promise to pay bearer"), "order or bearer", "order and bearer", or OTHERWISE INDICATES THE POSSESSOR IS ENTITLED TO PAYMENT; ii) DOES NOT NAME a payee; OR iii) is PAYABLE TO "CASH" or otherwise indicates that it is not payable to an identified person

an instrument is payable on demand if it fails to state a time for payment or states that it is payable "on demand," "at sight," etc.

payable at a time readily ascertainable when instrument is issued

by transferring possession of the instrument

-negotiated by transferring possession along with the identified person's indorsement -in most cases, forging the payee's name breaks the chain of title (and no subsequent holders can qualify as holders)

unless and until she obtains the indorsement, the transferee does not have the status of a holder

signature that is not accompanied by the naming of a specific indorsee; creates bearer paper

does not break the chain of title

any other language added to an indorsement creates a restrictive indorsement, which is generally ineffective to limit transfer or negotiation

it means they take free personal defenses and claims

requires the holder to take for value, in good faith, and without notice

any one of the following constitutes value: 1) performance 2) acquisition by the holder of a lien or a security interest in the instrument 3) taking the instrument as payment of or security for an antecedent debt 4) trading a negotiable instrument for another instrument; OR 5) giving the instrument in exchange for incurring an irrevocable obligation to a third person by the person taking the instrument NOTE: value need not be equivalent to face value

includes actual notice and reason to know

1) instrument is overdue 2) unauthorized signature or alteration 3) claims to the instrument 4) defenses or claims in recoupment 5) when and how notice must be received

1) forgery 2) fraud in the factum (real fraud) 3) alteration of instrument 4) incapacity to contract 5) infancy 6) illegality 7) duress 8) discharge in insolvency proceedings 9) SOL 10) accommodation (suretyship) defenses 11) discharges known to HDC

1) maker of note, issuer of cashier's check 2) indorser-secondary liability 3) transferor - 5 transfer warranties 4) drawer - secondary liability 5) drawee 6) acceptor 7) accommodation parties

by signing her name, the maker of a note makes a contract to pay the instrument according to its terms at the time it is issued. the promise is unconditional, but proper defenses may be raised. similar liability is imposed on the issuer of a cashier's check.