Commercial Paper Ch. 1 & 2

§ 3-103(a)(15): \"Remitter\" means a person who purchases an instrument from its issuer if the instrument is payable to an identified person other than the purchaser. Here Portia is a remitter in that she purchased a cashier's check from ONB who issued it to her but was payable to the car seller.

§1-201(37): \"Signed\" includes any symbol executed or adopted with present intention to adopt or accept a writing. Comments: A complete signature is not necessary. It may be printed, stamped or written; it may be by initials or by thumbprint; it may be on any part of the document and in appropriate cases may be found in a billhead or letterhead. The question is always whether the symbol was executed or adopted by the party with the present intention to adopt or accept the writing. Yes, the checks are negotiable if Chap by use of the symbol had the present intent of adopting or accepting the writing.

§3-401(b): Signature may be made (i) manually or by means of a device or machine, and (ii) by the use of any name, including a trade or assumed name, or by a word, mark, or symbol executed or adopted by a person with present intention to authenticate a writing. Yes, because a signature may be made by the use of any name including a trade name. Here, Walter used a trade name.

§3-106(a)(ii): a promise or order is unconditional unless it states that the promise or order is subject to or governed by another record. No: here the promise is not unconditional because it states that it is subject to the contract that was signed w/Honest. Therefore it is not negotiable.

§3-106(a)last sentence: A reference to another record does not of itself make the promise or order conditional. Yes; here the promise makes a mere reference to another record which does not make the promise conditional. Therefore it is negotiable.

3-106(b)(i): A promise or order is not made conditional (i) by a reference to another record for a statement of rights with respect to collateral, prepayment, or acceleration. Yes; here the promise merely references another document in regards to the rights as to prepayment and acceleration. Therefore it is negotiable.

Yes. This language Void After 90 days does not destroy negotiability however if the 90 days expire, the instrument will not be negotiable.

§3-106(b)(i) A promise or order is not made conditional by a reference to another record for a statement of rights with respect to collateral, prepayment, or acceleration. Comments: Most notes are secured by collateral and are subject to acceleration in the event of default or are subject to prepayment. A statement of rights and obligations concerning collateral, prepayment, or acceleration does not prevent the note from being an instrument if the statement is in the note itself. It does not have to be included in the note but rather a reference to an accompanying loan agreement, security agreement or mortgage for that statement is ok. No: this clause represents a statement of rights and obligations concerning collateral, prepayment. It does not prevent the note from being an instrument because it is in the note itself. This is a permissible clause; therefore it does not destroy negotiability.

§3-112(b): Interest may be stated in an instrument as a fixed or variable amount of money or it may be expressed as a fixed or variable rate or rates. The amount or rate of interest may be stated or described in the instrument in any manner and may require reference to information not contained in the instrument. If an instrument provides for interest, but the amount of interest payable cannot be ascertained from the description, interest is payable at the judgment rate in effect at the place of payment of the instrument and at the time interest first accrues. No:. Because the amount of interest stated required the holder to refer to information not contained in the instrument does not destroy negotiability. You can have an instrument that refers to interest which may be fixed or variable. A negotiable instrument doesn't have to have interest. However, if you can't determine interest, you can use the judicial rate.

§3-104(a)(3): negotiable instrument means an unconditional promise or order to pay a fixed amount of money, with or w/o interest or other charges in the promise or order if the promise does not state any other undertaking or instruction by the person promising or ordering payment to do any act in addition to the payment of money. Yes: here, this note is not negotiable because the clause is a promise to do another undertaking which is the acceptance of another contract of sale. Therefore it destroys negotiability.

§3-104(a)(3)(i): the promise or order may contain an undertaking or power to give, maintain, or protect collateral to secure payment. §1-309: term that provides that a party may accelerate payment or performance or require collateral or additional collateral \"at will\" or when the party \"deems itself insecure\" or similar words, means that the party has this power only if the party in good faith believes that the prospect of payment or performance is impaired. The burden is only the party against which the power has been exercised. No; here the insecurity clause will be effective if exercised in good faith and therefore does not destroy negotiability.

§3-104a(3)(ii): the promise must not state any other undertaking or instruction by the person promising or ordering payment to do any act in addition to the payment of money. The promise or order may contain an authorization or power to the holder to confess judgment or realize on or dispose of collateral. Yes; a holder can confess judgment; however, giving the holder the power to select attorney for maker destroys negotiability because it represent another undertaking.

§3-311(a) If a person against whom a claim is asserted proves that (i) the instrument was tendered in good faith, (ii) the amount of the claim was unliquidated (damages not specified) or subject to a bona fide dispute, and (iii) the claimant obtained payment of the instrument, then the claim is d/c if the person proves that the instrument or written communication contained a statement that the instrument was tendered as full satisfaction of the claim. No; If there is a bona fide dispute and the claim was for unliquidated damages and the instrument was tendered in good faith, this would not destroy negotiability.

§3-104(a)(3)(i) the promise or order may contain (i) an undertaking or power to give, maintain, or protect collateral to secure payment. Yes. This is a permissible undertaking. The granting of security in this case is the same as protecting collateral to secure payment. Therefore the granting of security does not destroy negotiability.

§3-108(b) A promise or order is \"payable at a definite time\" if it is payable on elapse of a definite period of time after sight or acceptance or at a fixed date or dates or at a time or times readily ascertainable at the time the promise or order is issued. No; here, sight means payable on demand. Therefore sight does not destroy negotiability.

§3-115 (a): Incomplete instrument is a signed writing, the contents of which show at time of signing that it is incomplete but that the signer intended that it is to be completed by the addition of words or numbers. (c) if words or numbers are added to an incomplete instrument w/o authority of the signer, there is an alteration of the incomplete instrument. Here the when the blanks are not filled in it's not for a definite time or date and it's not payable on demand. Therefore it's not negotiable until the blanks are filled in. The blanks can be filled in by someone else, if it is the signer intent for the blanks to be filled in. This is a technically that can be corrected. However, if the signer does not intend for this to be done, then the incomplete instrument is considered to have been altered.

§1-309: term that provides that a party may accelerate payment or performance or require collateral or additional collateral \"at will\" or when the party \"deems itself insecure\" or similar words, means that the party has this power only if the party in good faith believes that the prospect of payment or performance is impaired. The burden is only the party against which the power has been exercised. No; here there's a definite date but the second clause serves as an acceleration clause. This does not destroy negotiability.

§ 3-108(b): A promise or order is \"payable at a definite time\" if it is payable on elapse of a definite period of time after sight or acceptance or at a fixed date or dates or at a time or times readily ascertainable at the time the promise or order is issued. Yes; here it's not a fix time; it's not payable on demand; not a time that's readily ascertainable. The language is indefinite therefore it's not negotiable.

§ 3-108(b)(iv): A promise or order is \"payable at a definite time\" if it is payable on elapse of a definite period of time after sight or acceptance or at a fixed date or dates or at a time or times readily ascertainable at the time the promise or order is issued, subject to rights of an extension to a further definite time at the option of the maker or acceptor or automatically upon or after a specified act or event. No; you can extend time to another definite date. Therefore it is negotiable b/c the clause \"if my potato crop fails then... sounds like a condition but because it was extended to another definite date of 11/8/11, it's ok and does not destroy negotiability.

3-108(b)(iv): A promise or order is \"payable at a definite time\" if it is payable on elapse of a definite period of time after sight or acceptance or at a fixed date or dates or at a time or times readily ascertainable at the time the promise or order is issued, subject to rights of an extension to a further definite time at the option of the maker or acceptor or automatically upon or after a specified act or event. Yes: here, although there's a definite date, the fact that the maker has reserved the option to extend payment to an unspecified date is not a definite time and therefore negotiability has been destroyed.

§ 3-108(b): A promise or order is \"payable at a definite time\" if it is payable on elapse of a definite period of time after sight or acceptance or at a fixed date or dates or at a time or times readily ascertainable at the time the promise or order is issued. Yes; here, the instrument is not negotiable b/c it is contingent upon Al's death. It is not readily ascertainable when Al will die.

§ 3-108(b)(ii) A promise or order is \"payable at a definite time\" if it is payable on elapse of a definite period of time after sight or acceptance or at a fixed date or dates or at a time or times readily ascertainable at the time the promise or order is issued, subject to rights of acceleration. No; here, the clause \"payable 100yrs from today\" is a definite date; the clause \"but ...\" act as an acceleration clause. Therefore it is negotiable.

§ 3-108(b): A promise or order is \"payable at a definite time\" if it is payable on elapse of a definite period of time after sight or acceptance or at a fixed date or dates or at a time or times readily ascertainable at the time the promise or order is issued. Yes; here it is not negotiable because the person's birthday is not readily obtainable. Therefore it destroys negotiability. (if a specific would have indicated it would have been ok)

§3-109(a)(3): a promise or order is payable to bearer if it states that it is payable to or to the order of cash or otherwise indicates that it is not payable to an identified person. No; here the promise indicates that its payable to an identified person John Smith. Therefore its not bearer paper.

§3-109(a)(1): a promise or order is \"payable to bearer if it states that it is payable to bearer or to the order of bearer or otherwise indicates that the person in possession of the promise or order is entitled to payment. Yes; here the promise states that it is payable to the order of bearer. Therefore, it is bearer paper.

§3-109(a)(1): a promise or order is \"payable to bearer if it states that it is payable to bearer or to the order of bearer or otherwise indicates that the person in possession of the promise or order is entitled to payment. Yes; here the promise states that it is payable to bearer. Therefore it it bearer paper.

§3-109(a)(3): a promise or order is payable to bearer if it states that it is payable to or to the order of cash or otherwise indicates that it is not payable to an identified person. Yes; here the promise states that it is payable to order of cash. Therefore it is bearer paper.

§3-109(a)(3): a promise or order is payable to bearer if it states that it is payable to or to the order of cash or otherwise indicates that it is not payable to an identified person. Yes; here the promise is unidentified person so therefore it is bearer paper. It doesn't have to have the language \"Bearer\" as long as it is an unidentified person. However, if the person in possession of the instrument is named Merry Christmas and can prove it then an argument can be made that the promise indicates and identified person.

As long as it is blank, then it's non-negotiable. However, once the blanks are filled in it will be either bearer or order. Remember signer must intend that the instrument to be completed by the addition of words or numbers.

§3-110(c)(2)(i): a person to whom an instrument is payable may be identified in any way, including by name, identifying number. Office, or account number. If an instrument is payable to a trust, an estate, or a person described as a trustee or representative of a trust or estate, the instrument is payable to the trustee, the representative, or a successor of either, whether or not the beneficiary or estate is also named. Not bearer; here because the estate is treated like a person, so the promise indicates and identified person. Therefore, it does not create bearer paper. Not order paper; here because it is an identified person. To be order paper the promise would have to state \"pay to order of\" or \"identified person or order\". These words are omitted and therefore does not create order paper.

§3-110(c)(2)(iv): a person to whom an instrument is payable may be identified in any way, including by name, identifying number. Office, or account number. If an instrument is payable to an office or to a person described as holding an office, the instrument is payable to the named person, the incumbent of the office, or a successor to the incumbent. Yes order paper; because the promise is payable to the order of the office of the President of US. Therefore it is order paper.

Yes. Still negotiable. If a promissory note and not preprinted, don't write \"pay to the order of\"

Drawer a person who signs or is identified in a draft as a person ordering payment. (§ 3- 103 {5}). David Hansen, Drawee a person ordered in a draft to make payment. (§ 3-103 {4}). Mechanical National Bank, Payee a person to whom the note is made payable to. William Egger, Depositary Bank the first bank to take an item even though it is also the payor bank, unless the item is presented for immediate payment over the counter. (§ 1-105 {2}). Octopus National Bank

§ 1-201(b)(21): \"Holder\"(A) the person in possession of a negotiable instrument that is payable either to bearer or to an identified person that is the person in possession; (B) the person in possession of a negotiable tangible document of title if the goods are deliverable either to bearer or to the order of the person in possession; or (C) the person in control of a negotiable electronic document of title. David Hansen ► No, b/c he's the drawer so he can't he holder. William Egger ►Yes, b/c as the payer he was the holder b/c he was in possession and it was payable to the order of W. Egger. Cynthia Egger ►Yes, W. Egger gave it to her after he blank indorsed it. Manager of Cornucopia Grocery ► Yes, He's a holder on behalf of CG to the extent of his agency. Cornucopia Grocery ► Yes, Billy Speed ►No, b/c Speed although was in possession of the check, he was not the identified person in possession. Octopus National Bank ► Yes, to the extent that it is accepted as a deposit. Mechanical National Bank ►No, b/c MNB is the drawee (payor bank) so can't be holder. Here, when the check was 1st issued, it was order paper b/c is said \"Pay to order\". William signed the check and gave it to Cynthia. Because it was a blank indorsement it was converted to bearer paper because anyone in possession could cash it. When the Manager wrote on the back \"Pay to\" it was a special indorsement and therefore the check was converted back to order paper.

§4-205: If a customer deliver an item to a depository bank for collection the depository bank becomes a holder of the item at the time it receives the item for collection if the customer at the time of delivery was a holder of the item, whether or not the customer indorses the item, and if the bank satisfies other holder in course requirement. Yes, b/c W. Egger was a holder of the time at the time he deposited the check.

He converted it from bearer paper to order through special indorsement, therefore only CG can cash the check.

§3-204(a): \"Indorsement\" means a signature, other than that of a signer as maker, drawer, or acceptor, that alone or accompanied by other words is made on an instrument for the purpose of (i) negotiating the instrument, (ii) restricting payment of instrument, or (iii) incurring indorser's liability on the instrument, but regardless of the intent of the signer, a signature and its accompanying words, terms of the instrument, place of the signature, or other circumstances unambiguously indicated that the signature was made for a purpose other than indorsement. William EggerBlank Indorser ManagerSpecial Indorser Octopus National BankEndorser (stamped) Class Notes: Special indorsement you can put \"Pay to\" on the back of the check. It doesn't have to have \"order\". However, on the front of the check you must have \"Pay to order\". The omission of \"order\" on back for a special indorsement does not destroy the negotiability of an instrument.

§3-110(d): If an instrument is payable to two or more persons not alternatively (and), it is payable to all of them and may be negotiated, discharged, or enforced only by all of them. Yes both payees must endorse it; b/c the instrument is payable to Mary and Donald it is not payable alternatively therefore it is payable to both of them.

? §3-110(d): If an instrument is payable to two or more persons alternatively (or), it is payable to any of them and may be negotiated, discharged, or enforced by any or all of them in possession of the instrument. No both do not have to endorse now, either can endorse; b/c the instrument is payable to Mary or Donald it is payable alternatively therefore either can endorse.

§3-110(d): If an instrument payable to two or more persons is ambiguous as to whether it is payable to the persons alternatively, the instrument is payable to the persons alternatively. No both do not need to endorse; w/o the connecting words either can sign b/c its ambiguous.

§3-204(d): If an instrument is payable to a holder under a name that is not the name of the holder, indorsement may be made by the holder in the name stated in the instrument or in the holder's name or both, but signature in both names may be required by a person paying or taking the instrument for value or collection. Portia can either sign it with her name misspelled or she can spell her name correctly but the bank may require her to sign both ways.

§3-204(a)(iii): \"Indorsement\" means a signature, other than that of a signer as maker, drawer, or acceptor, that alone or accompanied by other words is made on an instrument for the purpose of incurring liability on the instrument. To determine whether a signature is made on an instrument, a paper affixed to the instrument is a part of the instrument. No. Desert paradise attempted to create an allonge by indorsing a separate paper however in order for this to be effective as a signature of indorsement it needed to be affixed to the instrument to be considered as a part of the instrument. By folding the separate sheet of paper and folding it into each promissory note, the signatures are not affixed to the instrument and therefore will not be considered as an indorsement being made on the instrument.

What does \"affixed\" mean? To secure to something; to attach.

No, it is too easy to separate; it must be secured tightly to the negotiable instrument.

Yes.

§3-306: a person taking an instrument, other than a person having rights of a holder in due course, is subject to a claim of a property or possessory right in the instrument or its proceeds, including a claim to rescind a negotiation and to recover the instrument or its proceeds. A person having rights of a holder in due course takes free of the claim to the instrument. If Laura wants to retrieve the check, she has a right to file a claim of a property or possessory right in a court of competent jurisdiction.

Yes; when Laura blanked indorsed the check it became bearer paper so therefore anyone who finds it can cash it. Therefore, Cornucopia is now a holder.

§3-205(a): If an indorsement is made by the holder of an instrument, whether payable to an identified person or payable to bearer, and the indorsement identifies a person to whom it makes the instrument payable, it is a special indorsement.\" When specially indorsed, an instrument becomes payable to the identified person and may be negotiated only by the indorsement of that person. No; b/c its order paper thru special indorsement, the only person who can cash it is Lilly Lawyer.

§3-205(c): The holder may convert a blank indorsement that consists only of a signature into a special indorsement by writing, above the signature of the indorser, words identifying the person to whom the instrument is made payable. Yes; when Laura signed her name on the check she executed a blank indorsement. When Lilly wrote above Laura's name \"Pay to Lilly\" she identified to whom the instrument was made payable; thus Lilly executed a special indorsement. At this point, the check was converted into order paper. Lilly's signature will be required if she desires to negotiate the check any further.