...payee or indorsee, it is not open to the defendant to plead that the plaintiff is a mere benamidar not entitled to payment with a view to show that the note has been discharged by payment to real owner. Again in the Full Bench decision of the Patna High Court in Bacha Prasad v. Janaki,2 it has been held that a person who is not a holder of a negotiable instrument cannot maintain a suit for recovery of money due under it even though holder is admittedly the benamidar and is impleaded in the suit. In the said decision, it has also been held that "a beneficiary cannot be called a holder of the instrument and payment to him cannot discharge the maker thereof unless the case falls under section 82(c) of the Act". So also, it has been held in the decision reported in Subharaya v. Abiram,3 that a beneficiary does not become a holder of the instrument even upon getting a declaration that he is the beneficial owner and the payee is only a benamidar. In this connection it has to be noted that Allahabad and Rajasthan High Courts have taken a slightly different view and held that in certain cases a beneficiary may maintain a suit on a negotiable instrument "if holder is also made a party to the suit" (see Sewa Ram v. Hoto Lal4 and Bhagirath v. Gulabkanwar,5). In the Rajasthan case there is a detailed discussion as to the circumstances under which a suit by a benamidar can be allowed to be maintained. Section 78 of the Act makes it clear that subject to the provisions of section (82) of the Act...
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...American National University | REAL DEFENSE | A Course of Action Against A Holder in Due Course | Marcus Bozeman 2-23-2016 | REAL DEFENSE A Couse of Action against the Holder in Due Course Defenses available against a Holder In Due course are Real Defenses. A Real Defense also known as a Universal Defense is a defense that can be used against any including a holder in due course. The understanding of what a real defense is not related to a transactions merits but actually to its nature as a legal act. The holder in due course is meant to be unaffected by any defenses between the immediate parties, real defense run counter to the considerations of the holder in due course and pressures the negotiable principle to yield. Real defenses include infancy and mental incompetence, illegality, duress, fraud as to the essential nature of the transaction, bankruptcy, unauthorized signature, and alteration (Brown & Sukys, 2013). These are the most common Real Defenses. The requirement to pay an instrument does not exist if there is a real defense. Infancy and mental incompetence also known as Incapacity is built around the fact that a given individual may not have the authority to negotiate an instrument, even if they believe that they know what they are doing. That person may be a minor who by law can’t enter into contract and be held responsible or someone that is mentally incompetent and legally not able to enter into enforceable contracts. Illegality, means...
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..._______________________ HOLDERS IN DUE COURSE I. ACQUIRING HOLDER IN DUE COURSE STATUS If you remember the rule that a holder in due course takes free of most of the defenses the parties to the original transaction have against one another, it is easy to see why it is important to determine if the person currently possessing the instrument qualifies as a holder in due course. The basic definition is found in §3-302(a), which you should read carefully. Official Comment 4 to §3-302 makes it clear that the payee can qualify as a holder in due course in some rare situations. Normally, the payee is so involved in the underlying transaction that he or she has notice of problems affecting payment obligations, and thus cannot be a holder in due course. But the examples given in Official Comment 4 describe fact patterns where the payee is innocent of such knowledge and can therefore qualify for the protection given to holders in due course. See also Eldon’s Super Fresh Stores, Inc. v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 296 Minn. 130, 207 N.W.2d 282, 12 U.C.C. Rep. Serv. 490 (1973), for an example of the payee as a holder in due course. 35 36 3. Holders in Due Course Subsection (c) gives a list of extraordinary transactions — creditors seizing instruments by judicial process, the sale of an inventoried business (a ‘‘bulk transaction’’), or the appointment of the administrator of an estate containing negotiable instruments — in which the transferee is statutorily denied holder in due course...
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...Negotiable Instruments Act does not define a negotiable instrument but merely states, “ a negotiable instrument means a promissory note, bill of exchange or cheque payable either to order or bearer.” (Section 13). This section does not prohibit any other instrument that satisfies the essential features of portability. Justice K. C. Willis defines these as, “ one the property in which is acquired by anyone who takes it bonafide and for value notwithstanding any defect in title in the person from whom he took it.” Thomas defines it in his book “Commerce, Its theory and Practice “A negotiable instrument is one which is, by a legally recognized custom of trade or by law, transferable by delivery in such circumstances that (a) the holder of it for the time being may sue on it in his own name and (b) the property in it passes, free from equities, to a bona-fide transferee for value, notwithstanding any defect in the title of the transferor.” It : (1) entitles a person to a sum of money (2) is transferable (by customs of trade) by delivery, like cash, or by Endorsement and delivery and delivery, and (3) is capable of being used upon by the person holding for the time being i.e. the person to whom it is transferred becomes entitled to money and also a right to further transfer it. Characteristics of negotiable instruments The important characteristics are as follows – (1) Free Transferability : A negotiable instrument...
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...NEGOTIABLE INSTRUMENTS ACT,1881 Definition of a Negotiable Instrument. The law relating to negotiable instruments is contained in the Negotiable Instruments Act, 1881. It is an Act to define and amend the law relating to promissory notes, bills of exchange and cheques. The Act does not affect the custom or local usage relating to an instrument in oriental language i.e., a Hundi. The term "negotiable instrument" means a document transferable from one person to another. However the Act has not defined the term. It merely says that "A .negotiable instrument" means a promissory note, bill of exchange or cheque payab1e either to order or to bearer. [Section 13(1)] A negotiable instrument may be defined as "an instrument, the. property in which is acquired by anyone who takes it bona fide, and for value, notwithstan~ing any defect of title in the person from whom he took it, from which it follo~s that an instrument cannot be negotiable unless it is such and in such a state that the true owner could transfer the contract or engagement contained therein by simple delivery of instrument" (Willis- The Law of Negotiable Securities, Page 6). According to this definition the following are the conditions of negotiability: (i) The instrument should be freely transferable. An instrument cannot be negotiable unless it is such and in such state that the true owner could transfer by simple delivery or endorsement and delivery. (ii) The person who takes it for value...
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...A negotiable instrument is a document guaranteeing the payment of a specific amount of money, either on demand, or at a set time, with the payer named on the document. More specifically, it is a document contemplated by or consisting of a contract, which promises the payment of money without condition, which may be paid either on demand or at a future date. The term can have different meanings, depending on what law is being applied and what country it is used in and what context it is used in. Examples of negotiable instruments include promissory notes, bills of exchange, banknotes, and cheques. Because money is promised to be paid, the instrument itself can be used by the holder in due course as a store of value. The instrument may be transferred to a third party; it is the holder of the instrument who will ultimately get paid by the payer on the instrument. Transfers can happen at less than the face value of the instrument and this is known as discounting; this may happen for example if there is doubt about the payer's ability to pay. Common prototypes of bills of exchanges and promissory notes originated in China. There, in the 8th century during the reign of the Tang Dynasty they used special instruments called feitsyan for the safe transfer of money over long distances.[1] Later such document for money transfer used by Arab merchants, who had used the prototypes of bills of exchange – suftadja and hawala in 10–13th centuries, then such prototypes had been used by Italian...
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...Types of Commercial Paper The UCC identifies four basic kinds of commercial paper: promissory notes, drafts, checks, and certificates of deposit. The most fundamental type of commercial paper is a promissory note, a written pledge to pay money. A promissory note is a two-party paper. The maker is the individual who promises to pay while the payee or holder is the person to whom payment is promised. The payee can be either a specifically named individual or merely the bearer of the instrument who has it in his or her physical possession when he or she seeks to be paid according to its terms. A note payable to "bearer" can be paid to the person who presents it for remuneration. Such an instrument is said to be bearer paper. A promissory note that is payable on demand can be redeemed by the payee at any time, whereas a time note has a date for payment on its face that establishes the date when the holder will have an enforceable right to receive payment under it. There is no obligation to pay a time note until the date designated on its face. The ordinary purpose of a promissory note is to borrow money. Promissory notes should not be confused with credit or loan agreements, which are separate instruments that are usually signed at the same time as promissory notes, but which merely describe the terms of the transactions. A promissory note serves as documentary evidence of a debt. It can be endorsed and sold at a discount to other parties, and each subsequent endorser becomes...
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...NEGOTIABLE INSTRUMENTS ACT,1881 Definition of a Negotiable Instrument. The law relating to negotiable instruments is contained in the Negotiable Instruments Act, 1881. It is an Act to define and amend the law relating to promissory notes, bills of exchange and cheques. The Act does not affect the custom or local usage relating to an instrument in oriental language i.e., a Hundi. The term "negotiable instrument" means a document transferable from one person to another. However the Act has not defined the term. It merely says that "A .negotiable instrument" means a promissory note, bill of exchange or cheque payab1e either to order or to bearer. [Section 13(1)] A negotiable instrument may be defined as "an instrument, the. property in which is acquired by anyone who takes it bona fide, and for value, notwithstan~ing any defect of title in the person from whom he took it, from which it follo~s that an instrument cannot be negotiable unless it is such and in such a state that the true owner could transfer the contract or engagement contained therein by simple delivery of instrument" (Willis- The Law of Negotiable Securities, Page 6). According to this definition the following are the conditions of negotiability: (i) The instrument should be freely transferable. An instrument cannot be negotiable unless it is such and in such state that the true owner could transfer by simple delivery or endorsement and delivery. (ii) The person who takes it for value...
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...form, intended as a substitute for money and intended to pass from hand to hand, to give the holder in due course the right to hold the same and collect the sum due. 2. Characteristics of Negotiable Instruments: a. negotiability – right of transferee to hold the instrument and collect the sum due b. accumulation of secondary contracts – instrument is negotiated from person to person 3. Difference between Negotiable Instruments from Non-Negotiable Instruments: Negotiable Instruments | Non-negotiable Instruments | Contains all the requisites of Sec. 1 of the NIL | does not contain all the requisites of Sec. 1 of the NIL | Transferred by negotiation | transferred by assignment | Holder in due course may have better rights than transferor | transferee acquires rights only of his transferor | Prior parties warrant payment | prior parties merely warrant legality of title | Transferee has right of recourse against intermediate parties | transferee has no right of recourse | 4. Difference between Negotiable Instruments and Negotiable Documents of Title Negotiable Instruments | Negotiable Documents of Title | Have requisites of Sec. 1 of the NIL | does not contain requisites of Sec. 1 of NIL | Have right of recourse against intermediate parties who are secondarily liable | no secondary liability of intermediate parties | Holder in due course may have rights better than transferor | transferee merely steps into the shoes of the transferor...
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...alternate courses, that documents the event of a bank customer withdrawing money from an ATM. Illustrate the use case using Visio or a similar product. This use case describes how the Bank Account Holder uses the ATM to withdraw money his/her bank account. The actors are the Account Holder and the bank. Some of the preconditions that already in us is that: (1) there is an active network connection to the Bank; and (2) the ATM has cash available. In this use case the basic flow of events consists of the following: (1) The Account Holder places card in card slot; (2) the system prompts Account Holder for PIN; (3) the Account Holder enters in PIN; (4)the system verifies the card and PIN are valid and prompts user to select a transaction; (5) the bank customer selects an account; (6) the Account Holder selects Withdrawal; (7) the system retrieves account information and prompts account holder for amount to withdraw; (8) the Account Holder enters the amount; (9) the system verifies that there is enough money in the account to support the withdrawal; (10) the system verifies there is enough cash in the machine to support the withdrawal and replies with a go/no go reply telling if the transaction is ok; (11) The system reduces the account by the amount requested and dispenses money to the Account Holder; (12) the card is returned to the Account Holder; (13) the receipt is printed; and finally; (14) the use case ends successfully. Alternate Course: Card Rejected. In this course flow of...
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...Assignment on Negotiable Instrument Course Title: Legal Environment of International Business Prepared by: Farha Fatema Date of Submission: 28/04/2011 Executive Summary Negotiable instruments are written orders or unconditional promises to pay a fixed sum of money on demand or at a certain time. Promissory notes, bills of exchange, checks, drafts, and certificates of deposit are all examples of negotiable instruments. Negotiable instruments may be transferred from one person to another, who is known as a holder in due course. Upon transfer, also called negotiation of the instrument, the holder in due course obtains full legal title to the instrument. Negotiable instruments may be transferred by delivery or by endorsement and delivery. One type of negotiable instrument, called a promissory note, involves only two parties, the maker of the note and the payee, or the party to whom the note is payable. With a promissory note, the maker promises to pay a certain amount to the payee. Another type of negotiable instrument, called a bill of exchange, involves three parties. The party who drafts the bill of exchange is known as the drawer. The party who is called on to make payment is known as the drawee, and the party to whom payment is to be made is known as the payee. A check is an example of a bill of exchange, where the individual or business writing the check is the drawer, the bank is the drawee, and the person or business...
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...Ninth Edition CPA Preparatory Program Regulation Negotiable Instruments Sample Brian Hock, CMA, CIA with Dave Fairchild, CPA, CMA HOCK international, LLC P.O. Box 204 Oxford, Ohio 45056 (866) 807-HOCK or (866) 807-4625 (281) 652-5768 www.hockinternational.com cma@hockinternational.com Published August 2011 Acknowledgements Material from Uniform CPA Examination, Selected Questions and Unofficial Answers, Copyright © 1990-2011 by the American Institute of Certified Public Accountants, Inc., is reprinted and/or adapted with permission. Acknowledgement is due to the Institute of Certified Management Accountants for permission to use questions and problems from past CMA Exams. The questions and unofficial answers are copyrighted by the Certified Institute of Management Accountants and have been used here with their permission. © 2011 HOCK international, LLC No part of this work may be used, transmitted, reproduced or sold in any form or by any means without prior written permission from HOCK international, LLC. Thanks The author would like to thank the following people for their assistance in the production of this material: Kevin Hock for his work in the formatting and layout of the material, Lynn Roden, CMA for her assistance in the technical elements of the material, All of the staff of HOCK Training and HOCK international for their patience in the multiple revisions of the material, The students of HOCK Training in all of our classrooms and...
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...The case at hand pertains to business ethics. Business ethics are the moral principles that steer businesses to act ethically while making sound decisions for the good of the business and making the right choices. This is the main reason why businesses have policies and rules that are followed in their day-to-day operations of the business and if there is a violation depending on the circumstances the individual(s) could be terminated as individuals or fined as a business. Furthermore, if you are working for a company and you are asked to do something that may be unethical weigh your options and make a sound decision accordingly to the benefit of the company and yourself morally. Parties The plaintiffs and defendants in this case are as follows: General Investment Corp. is a corporation based out of New Jersey (Plaintiff-Respondent), Anthony V. Angelini and Delores H. Angelini homeowners (Defendant-Appellants), Lustro Aluminum Products Inc. contracted to put siding on home (Defendant). The Supreme Court decided on June 7, 1971. Mr. Milton argued the case for the appellants, and Mr. Davis S. Baime argued the case for the respondent from Baime and Baime attorneys. Francis J. delivered the opinion of the court. Facts Anthony and Delores Angelini are homeowners that needed work done on their home. Lustro Aluminum Products is a contracting company that does home repair. The Angelini’s entered into a contract with Lustro for repair work on their home on December 10, 1966.” Lustro...
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...NEGOTIABLE INSTRUMENTS LAW (Act No. 2031) PRELIMINARIES Definitions/Distinctions: Negotiable Instrument- A written contract for the payment of money which is intended as a substitute for money and passes from one person to another as money, in such a manner as to give a holder in due course the right to hold the instrument free from defenses available to prior parties. (Sundiang, Reviewer on Commercial Law, p. 80, Third Edition 2006) Promissory Note- An unconditional promise in writing made by one person to another, signed by the maker, engaging to pay on demand, or at a fixed or determinable future time, a sum certain in money to order or to bearer. (Sec. 184, Negotiable Instruments Law [NIL]) Initial parties: a. Maker b. Payee Bill of Exchange- An unconditional order in writing addressed by one person to another, signed by the person giving it, requiring the person to whom it is addressed to pay on demand or at a fixed or determinable future time a sum certain in money to order or to bearer. (Sec. 126, NIL) Initial parties: a. Drawer b. Drawee c. Payee Check- A bill of exchange drawn on a bank payable on demand. (Sec. 185, NIL) Initial parties: a. Drawer b. Drawee c. Payee *As to distinctions between a bill of exchange and a check, please see discussion of Prof. De Leon in Sec. 185. Characteristics: 1. Negotiability 2. Accumulation of Secondary Contracts FORM OF A NEGOTIABLE INSTRUMENT Section 1. Form of negotiable instruments...
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...Daniels is involved in two different scenarios that have a few issues. In the first fact pattern the issues presented are holder in due course, negotiable instrument, ordinary contract principles, and estoppel. In the following fact pattern, the issue presented is surety versus guaranty. The issues will be solved by analyzing the law of the specific topic or term. First State Bank of Gallup was trying to collect from the maker of the note, in this case Daniels, because Clark defaulted on the loan after several payments. Daniel refuses to pay arguing that the note was a nonnegotiable instrument and therefore invalid in the hands of the bank. For First State Bank to able to collect from Daniels, has to be a holder in due course if the note is a negotiable instrument. Under the U.C.C. – Article 3 – a holder in due course means the “holder of an instrument if: the instrument when issued or negotiated to the holder does not bear such apparent evidence of forgery or alteration or is not otherwise so irregular or incomplete as to call into question its authenticity; and the holder took the instrument (i) for value, (ii) in good faith, (iii) without notice that the instrument is overdue or has been dishonored or that there is an uncured default with respect to payment of another instrument issued as part of the same series, (iv) without notice that the instrument contains an unauthorized signature or has been altered, (v) without notice of any claim to the instrument described in Section...
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