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Payment System
Vocab
54
Law
Graduate
08/30/2012

Additional Law Flashcards

 


 

Cards

Term
Anomalous Indorsement §3-205(d)
Definition
When a non-holder signs the instrument. Shares the liability.
Term

Restrictive Indorsement

§3-206(c)

Definition
Taking an Instrument but dictating where the proceeds go. You restrict where the check is able to go. What ever bank first takes this type of check must follow the instructions.
Term
Endorserds Liability
Definition
In an instrument is dishonored and endorser-insurer is obligated to pay the instrument (i) according to its terms at the time it was endorsed, or (ii) id incomplete when endorsed, according to its completed terms. The endorser's obligation is owed to a PETE or to a subsequent endorser who paid the instrument.
Term
PETE
Definition

Someone who is legally entitled to make a demand that an instrument be paid.

 

i) the holder of the instrument

ii) a nonholder in possession of the instrument that has the rights of a holder

Term
Holder 1-201 §(b)(21)(A)
Definition

A Holder  is the person in possession of a negotiable instrument that is payable either to ____bearer___,  or to ___order________ that is the person __identification________.  

Term
What is necessary for negotiation? 3-201 (b)
Definition

—Except for negotiation by a remitter, if an instrument is payable to an identified person  negotiation requires transfer of possession and endorsement
— If the Instrument is made payable to bearer, it may be negotiated by transfer of possession alone.  

Term
How to become a holder
Definition
If an instrument is payable to the order of a named payee, only that person can become a holder once the person gets possession. If an instrument is payable to bearer, ANYONE can become a holder
Term
Special Endorsement §3-205 (a)
Definition
When the endorsement identifies a person to whom the check is made payable.
Term
Blank Endorsement §3-205(b)
Definition
When an instrument is endorsed and is not made a special endorsement. When an instrument is given a blank endorsement it is made bearer paper and is negotiable with mere possession.
Term
Endorsement §3-204
Definition
A signature  that is made on an instument for the purposes of restricting the payment of the instrument, incurring the endorsors liability or negotiating the instrument
Term
A holder in due course §3-302
Definition
A holder of the instrument (1) the instrument when issued or negotiated to the holder does not bear such apparent evidence of forgery or is not otherwise so irregular or incomplete as to call into question its authenticity. (2) You must take the instrument for value, in good faith, without notice that the instrument is overdue, dishonored or uncured default, forgery/alteration, claims to the instrument (described in §3-306), defenses or claims in recoupment.
Term
Negotiation §3-201
Definition
The transfer of possession whether voluntary or involuntary of a person other than the issuer to a person who thereby become the holder.
Term
Transfer §3-203
Definition
Delivery by a person other than the issuer for the purpose of giving the person receiving delivery the right to enforce.
Term

Effect of Transfor

"The Shelter Doctrine"

Definition
to vest in the transferee any right of the transfor
Term
Note §3-104
Definition
A written promise to pay money
Term
Draft §3-104
Definition
is a written order by one person, directing the latter to pay money to a third person
Term
Good Faith §3-103(a)(4)
Definition
Honesty in fact and the observance of reasonable commercial standard of fair dealing
Term
confess judgment clause
Definition
If you the maker don't pay the maker can go to court and confess judgment on your behalf
Term
Usury
Definition
When you lend money and charge excessive interest rate- this is a possible defense
Term
Jus Teri
Definition
Rights of the third party. The transfer of some peice of property that allows a thrid party to have rights to enforce
Term
maker §3-103 (a)(5)
Definition
a person who makes the promise to pay
Term
Drawer §3-103(a)(3)
Definition
the person who creates the draft and orders the drawee to pay
Term
drawee 3-103(a)(2)
Definition
the person who creates the draft and orders the drawee to pay
Term
Transfer §3-203
Definition

·      every significant legal movement of the paper in between issuance and presentment

 

Term
shelter rule
Definition
Trander of an instrument vests in the transferee any right of the transferor to enforce the insturment including any rights as a holder in due course
Term
Value §3-303
Definition

§  It is issued/transferred for a promise of performance to the extent that the promise has been performance

§  The transfer acquires security interest/ lien in the interest (other than judicial lien)

§  The instrument is issued/transferred as payment or security for an antecedent claim against any person

§  The instrument is issued/transferred as payment or security or an antecedent claim against any person;

§  The instrument is issued/transferred in exchange for a negotiable instrument

§  The instrument is I/T in exchange for a negotiable instrument

§  The instrument is issued/transferred in exchange for an irrevocable obligation to a third party.

Term
Allonage
Definition
a slip of paper affixed to a negotiable instrument, as a bill of exchange, for the purpose of receiving additional endorsements for which there may not be sufficient space on the bill itself
Term
Remitter §3-103 (11)
Definition
eans a person who purchases an instrument from its issuer if the instrument is payable to an identified person other than the purchaser.
Term
Teller's Check §3-104(h)
Definition
means a draft drawn by a bank (i) on another bank, or (ii) payable at or through a bank.
Term
Cashiers check §3-104(g)
Definition
means a draft with respect to which the drawer and drawee are the same bank or branches of the same bank
Term
Depository bank
Definition
eans the first bank to take an item even though it is also thepayor bank, unless the item is presented for immediate payment over the counter
Term
Intermediary Bank
Definition
means a bank to which an item is transferred in course of collection except the depositary or payor bank;
Term
Certificate of deposit §3-104(j)
Definition
an instrument containing an acknowledgment by a bank that a sum of money has been received by the bank and a promise by the bank to repay the sum of money. A certificate of deposit is a note of the bank
Term
check §3-104(f)
Definition
(i) a draft, other than a documentary draft, payable on demand and drawn on a bank or (ii) a cashier's check or teller's check. An instrument may be a checkeven though it is described on its face by another term, such as "money order
Term
order paper
Definition
a note that identifies a specific person to be paid. this is indicated by the language 'pay to the order of'
Term
bearer paper
Definition
a note payable to anybody who possess the instrument
Term
Negotiability §3-104
Definition
(1) is payable to bearer or to order at the time it is issued or first comes into possession of a holder;
(2) is payable on demand or at a definite time; and
(3) 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, but the promise or order may contain (i) an undertaking or power to give, maintain, or protect collateral to secure payment, (ii) an authorization or power to the holder to confess judgment or realize on or dispose of collateral, or (iii) a waiver of the benefit of any law intended for the advantage or protection of an obligor.
Term
Presentment §3-501
Definition
means a demand made by or on behalf of a person entitled to enforce an instrument (i) to pay the instrument made to the drawee or a party obliged to pay the instrument or, in the case of a note or accepted draft payable at a bank, to the bank, or (ii) to accept a draft made to the drawee.
Term
Drawee §3-103 (a)(2)
Definition
A person ordered in a draft to make a payment
Term
Payor Bank §4-105 (3)
Definition
means a bank that is the drawee of a draft;
Term
Accommodating Party
Definition
igns the instrument for the purpose of incurring liability on the instrument without being a direct beneficiary of the value given for the instrument, the instrument is signed by the accommodation party "for accommodation."
Term
merger
Definition
when you issue a note or draft for an underlying obligation you suspend the obligation till the note is either paid or dishonored.
Term
Issuer
Definition
an issued and unissued instruments and means a maker or drawer of an instrument.
Term
Acceptor
Definition
drawee who has accepted the draft
Term
Acceptence
Definition
means the drawee's signed agreement to pay a draft as presented
Term
Surety
Definition
one (as an accommodation party) who promises to answer for the debt or default of another
Term
exoneration
Definition
The removal of a burden, charge, responsibility, duty, or blame imposed by law. The right of a party who is secondarily liable for a debt, such as a surety, to be reimbursed by the party with primary liability for payment of an obligation that should have been paid by the first party.
Term
Subrogation
Definition
The substitution of one person in the place of another with reference to a lawful claim, demand, or right, so that he or she who is substituted succeeds to the rights of the other in relation to the debt or claim, and its rights, remedies, or Securities
Term
Contribution
Definition
The right of a defendant who has paid an entire debt, or common liability, to recoup a proportionate share of the payment from another defendant who is equally responsible for the payment of that debt or liability.
Term
Accommodating Party
Definition
If an instrument is issued for value given for the benefit of a party to the instrument ("accommodated party") and another party to the instrument ("accommodation party") signs the instrument for the purpose of incurring liability on the instrument without being a direct beneficiary of the value given for the instrument, the instrument is signed by the accommodation party "for accommodation." There is an assumption that a person signing the instrument is an accommodating party.
Term
ccommodated Party
Definition
Term
Presentment
Definition
Term
Dishonor
Definition
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