writing, signed by maker, unconditional, promise or order to pay, fixed amount of money, no other unauthorized promise, on demand or at a definie time (to order or bearer)
HDC elements
possession, good title, good faith, w/o knowledge of issues
authorized promises
collateral
confess a judgment
waive legal rights
tx precluding HDC status
purchasing instrument at judicial sale
acquiring by taking over estate
acquired as part of bulk transaction
real defenses (FAIDS)
Forgery
Fraud in factum
Alteration
Incapacity
Illegaligt
Duress
Discharge in insolvency (BK)
Suretyship
Stat Lit
what is the shelter rule
transferee enjoys defenses of HDC
exception: doesnt apply if fraud/illegality affecting instrument
secondary liability for indorser
presentment (30 day limit)
dishonor
notice of dishonor
effect of a qualified endorsement
"without recourse" you get out of liability
what are the 5 transfer warranties?
good title
genuine signatures
no material alteration
no defenses
no knowledge of insolvency proceedings
drawee
bank
drawer
check maker
payee
check recipient
drawee
acceptance by bank discharges drawer
what is the properly payable rule
bank must pay checks that are properly payable, must not pay those not properly payable
validity of stop payment orders
valid if customer identified item & gave bank notice
oral - 14 days
written 6-mos
what is a stale check
6 mos or older, bank can cash if in good faith
post dated checks
only valid if gives bank notice and IDs the item
effect of drawer's death
payable until bank knows of death. 10 day window
effect of drawer's negligence
precludes asserting properly payable rule (ratified forgery or alteration)
effect of fictitious endorsements
impostors: valid eg im tiger woods
valid if EE responsible for check writing who forges signatures
drawer's negligence and wrongful honor claims
check signed blank - on the hook
late notice to bank for forgery etc - on the hook
3 common law doctrines that limit bank's liability