Uniform Commercial Code Article 3 governs negotiable instruments: drafts (including checks) and notes representing a promise to pay a sum of money, and that have independent value because they are negotiable.
What is Article 3 of UCC?
Article 3 of the Uniform Commercial Code (UCC) covers commercial paper but explicitly excludes money, documents of title, and investment securities . Documents of title include bills of lading and warehouse receipts and are governed by Article 7 of the UCC.
Which article of the UCC establishes the requirements for negotiable instruments quizlet?
To qualify as such, a document must meet requirements established by Revised Article 3 of UCC . Model code that establishes rules for the creation of, transfer of, enforcement of, and liability on negotiable instruments.
What does Article 2 of the UCC cover?
Article 2 is a vast segment of the UCC that specifically addresses contracts for the sale of goods . A good is any movable property identified at the time of the contract. ‘Goods’ are also sometimes known as ‘chattels. ‘
Which of the following is a requirement of a negotiable instrument?
An instrument to be negotiable must conform to the following requirements: (1) It must be in writing and signed by the maker or drawer ; (2) Must contain an unconditional promise or order to pay a sum certain in money; (3) Must be payable on demand, or at a fixed or determinable future time; (4) Must be payable to order ...
What article is negotiable instrument?
Every state has adopted Article 3 of the Uniform Commercial Code (UCC), with some modifications, as the law governing negotiable instruments. The UCC defines a negotiable instrument as an unconditioned writing that promises or orders the payment of a fixed amount of money.
What is Article 4 of the UCC?
Article 4 of the UCC deals with the liability of a bank for action or non-action with respect to an item handled by it for purposes of presentment, payment, or collection . The law of the place where the bank is located usually has more applicability in matters of bank deposits. Article 5 governs letters of credit.
What requirements must an instrument meet to be negotiable quizlet?
- Be in writing.
- Be signed by the maker or the drawer.
- Be an unconditional promise or order to pay.
- State a fixed amount of money.
- Be payable on demand or at a definite time.
- Be payable to order or to bearer, unless it is a check.
Which of the following is not a requirement for taking an instrument with HDC status?
Which of the following is NOT a requirement for HDC status? An instrument is dishonored when the party to whom the instrument is presented refuses to pay it . Joann does not qualify as a holder in due course (HDC), but takes possession of a promissory note through Madison, who is an HDC.
Is an indorsement that has no instructions or conditions attached to the payment of the funds?
A restrictive indorsement is one that has no instructions or conditions attached to the payment of the funds. If a payee’s name is misspelled, the payee will be prevented from indorsing the instrument, as it may amount to fraud, depending on the jurisdiction the payee resides in.
What does Article 9 of the UCC cover?
Article 9 is a section under the UCC governing secured transactions including the creation and enforcement of debts . Article 9 spells out the procedure for settling debts, including various types of collateralized loans and bonds.
What is the difference between Article 2 and Article 2A of the UCC?
Article 2 of the UCC deals with the sale of goods. Sale and goods have defined meanings. Article 2A of the UCC deals with the leasing of goods . Lease has a defined meaning, and the UCC recognizes two types of leases: consumer leases and finance leases.
What article of the UCC addresses negotiable instruments?
Uniform Commercial Code Article 3 governs negotiable instruments: drafts (including checks) and notes representing a promise to pay a sum of money, and that have independent value because they are negotiable.
Which article of the UCC specifically labels commercial paper as a negotiable instrument?
Article 3 of the UCC applies to negotiable instruments, specifically notes and drafts.
What requirements must an instrument meet to be negotiable Why do you think these are requirements?
To be negotiable, an instrument must meet the following requirements: It must (1) be in writing , (2) be signed by the maker or drawer, (3) contain an unconditional promise or order to pay, (4) state a fixed amount of money, (5) be payable on demand (or at sight) or at a definite time, (6) be payable to order or to ...
Which section of the negotiable instruments Act 1881 deals with negotiable instruments?
Negotiable Instrument meaning: According to Section 13 of the Negotiable Instrument Act, 1881, Negotiable Instrument means a promissory note, bill of exchange or cheque payable either to order or to bearer.
What are the requirements for a negotiable instrument under the UCC?
- the promise or order must be unconditional.
- the amount of money must be a fixed amount (with or without interest charges)
- the instrument must be payable to bearer or payable to order.
- the promise or order must be payable on demand or at a definite time, and.
What is an Article 8 Security?
Since 1994, Article 8 of the UCC considers that the majority of the dematerialized securities that are registered on an account with intermediaries are only reflections of their respective initial issue registered by the two American central securities depositories , respectively the Depository Trust Company (DTC) for ...
What is an example of a negotiable instrument?
A negotiable instrument is any financial document that directs payment to its holder or a named party. ... Examples of negotiable instruments include bank checks, promissory notes, certificates of deposit, and bills of exchange .
How is negotiable instrument negotiated?
– An instrument is negotiated when it is transferred from one person to another in such manner as to constitute the transferee the holder thereof. If payable to bearer, it is negotiated by delivery; if payable to order, it is negotiated by the indorsement of the holder and completed by delivery.
What is a UCC 5?
A UCC-5 is a statement that an error occurred: records an inaccuracy, or wrongfully filed document, or filed by person not entitled to do so.
Does UCC Article 2 apply to non merchants?
What is this? UCC Article 2 applies to the sale of goods between merchants or between a merchant and a non-merchant. As such, merchants are required to follow certain standards of conduct when engaging in a business or commercial contract. Transactions between non-merchants are not covered by Article 2 UCC.
Which of the following is a type of negotiable instrument in which the maker warrants to pay a certain amount to the payee?
Promissory notes and bills of exchange are two primary types of negotiable instruments. promissory note made by a bank and payable to bearer on demand. A bill of exchange or “draft” is a written order by the drawer to the drawee to pay money to the payee.
How does the negotiation of order instruments differ from the negotiation of bearer instruments?
Order instruments are negotiated by endorsement and a transfer of possession (delivery) . Bearer instruments are negotiated by a transfer of possession (delivery) alone.
How does negotiation differ from assignment?
Negotiation refers to the transfer of the negotiable instrument , by a person to another to make that person the holder of it. Assignment implies the transfer of rights, by a person to another, for the purpose of receiving the debt payment. ... The assignee has no right to sue the third party in his/her own name.
What are 5 Requirements to be a holder in due course?
- He must be a ‘holder’, i.e.: ...
- He must be a holder for valuable consideration, i.e.: ...
- He must have become the holder of the negotiable instrument before its maturity:
What does order paper require?
What Is an Order Paper? An order paper, or order instrument, is a negotiable instrument that is payable to a specified person or its assignee. An instrument such as an order paper is negotiable only if it is payable to the order of a specified person; meaning that it must designate an individual’s name to be paid out .
Which of the following are universal defenses available against all holders?
Real defenses are good against any holder, including an HDC. These are infancy, void obligations, fraud in the execution, bankruptcy, discharge of which holder has notice, unauthorized signatures, and fraudulent alterations.
What is a conditional indorsement?
Conditional indorsement refers to an indorsement restricting the instrument in some way . Conditional indorsement is also an indorsement that entitles possession to the indorsee, but retains title until the occurrence of some condition named in the indorsement.
Which of the following is not required for an instrument to be considered negotiable?
Section 3-106(a) of the UCC provides that an instrument is not negotiable if it “states (i) an express condition to payment , (ii) that the promise or order is subject to or governed by another writing, or (iii) that rights or obligations with respect to the promise or order are stated in another writing.
What are the requirements to be a holder in due course?
- There cannot be any clear proof of forgery or unauthenticated action of the negotiable document, or instrument.
- The document must have been accepted for its value.
- It must have been accepted in good faith.
- When accepted, the holder must not be aware of any default.
What section of the UCC defines negotiation of a negotiable instrument and who is a holder?
§ 3-201 . NEGOTIATION. (a) “Negotiation” means a transfer of possession, whether voluntary or involuntary, of an instrument by a person other than the issuer to a person who thereby becomes its holder.
Is a Trust Deed a negotiable instrument?
A negotiable instrument, such as a promissory note secured by a trust deed, contains an unconditional promise to pay a scheduled dollar amount to the holder of the note. A trust deed note, being a negotiable instrument, may be sold and assigned to others, such as a trust deed investor.
What is the topic of Article 10?
Article 10 protects your right to hold your own opinions and to express them freely without government interference .
What does Article 9 say?
Article 9 protects your right to freedom of thought, belief and religion . It includes the right to change your religion or beliefs at any time. You also have the right to put your thoughts and beliefs into action.
What is Article 9 of the United States Constitution?
Article 1, Section 9 of the U.S. Constitution places limits on the powers of Congress , the Legislative Branch. These restrictions include those on limiting the slave trade, suspending civil and legal protections of citizens, apportionment of direct taxes, and granting titles of nobility.
What is UCC Article 2A?
Uniform Commercial Code Article 2A is a proposed set of laws relating to personal property leasing . ... This “hell or high water” protection applies only to lessors who are not, in fact, the manufacturer or other vendor of the leased equipment. If the lease from such a lessor qualifies, it will be a UCC-2A “finance lease.”
What does Article 2 and 2A of the UCC cover?
Article 2 of the UCC deals with the sale of goods . Sale and goods have defined meanings. Article 2A of the UCC deals with the leasing of goods. Lease has a defined meaning, and the UCC recognizes two types of leases: consumer leases and finance leases.
What is Article 4 of the UCC?
Article 4 of the UCC deals with the liability of a bank for action or non-action with respect to an item handled by it for purposes of presentment, payment, or collection . The law of the place where the bank is located usually has more applicability in matters of bank deposits. Article 5 governs letters of credit.
What is required for a check to be negotiable quizlet?
To be negotiable, an instrument must: (1) be in writing (2) signed by the maker or drawer (3) containing an unconditional promise to pay or order (4) a fixed amount of money (5) on demand or at a definite time (6) containing no additional unauthorized promises or undertakings (7) payable to order or bearer (checks are ...
How is commercial paper negotiated to a holder?
A holder is a person who has an instrument drawn, issued, or indorsed to him or his order or to bearer or in blank. If the instrument is order paper, negotiation is accomplished by indorsement and delivery to the next holder ; if it is bearer paper or blank paper, delivery alone accomplishes negotiation.
What does UCC 1 103 mean?
UCC 1-103 is a provision of the Uniform Commercial Code titled “ Construction of Uniform Commercial Code to Promote its Purposes and Policies: Applicability of Supplemental Principles of Law”. ... Particular reference is made to merchant laws, contract laws, and agency laws.
