Law Outlines Oklahoma Bar Bundle Outlines
I entirely handwrote my notes for each subject of the bar exam and then used my notes to create my outlines for each subject. I passed the exam in 2012 on the first attempt. ...
The following is a more accessible plain text extract of the PDF sample above, taken from our Oklahoma Bar Bundle Outlines. Due to the challenges of extracting text from PDFs, it will have odd formatting:
Commercial Paper
Main Idea: Party is paying money for good and services in the form of paper
FORMS OF COMMERCIAL PAPER
Notes: 2 Instrument ( M & P)
Maker- person who signs or is identified in a note as the person promising/undertaking to pay
Payee- person to whom the note is made payable
Ex. Jake promises to pay to the order of Sarah the sum of $100
Jake= Maker
Sarah= Payee
Drafts: 3 Party Instrument (DDP)
Drawer- person who signs or is identified in a draft as the person ordering payment (writing of the check)
Drawee- the person ordered in a draft/check to make payment (bank)
Payee- the person to whom the draft is payable
Ex. A check
NEGOTIABILITY
A negotiable instrument is one that can be negotiated or assigned to a 3rd Party
Requirements
Written & Singed (by maker/drawer)
On something tangible
Almost always paper
Could be cow, tshirt, etc.
Signed:
Any symbol executed/adopted by a party w/ a present intention to authenticate a writing
Ex. Printed, stamped, initials, thumbprint
Can appear in body of instrument
Unconditional
Conditional promises okay but destroy negotiability
Ex. "I promise to pay IF"= not negotiable
Referring to another document will not destroy negotiability so long as payment not made subject to or conditioned upon performance of the underlying contract
Ex. "in accordance with" or "as per" is okay
Negotiability must be clear on the face of the instrument!!
Not conditional merely if
Refers to another writing for statement of rights regarding the collateral or payment
Limits payment to particular source of funds
Requires as a condition to payment a countersignature by a person whose signature appears on the promise (traveler checks)
Promise (note) or Order (draft) to Pay
IOU not negotiable- not a promise to pay
I wish you would pay- not an order to pay not negotiable
A fixed Amount of $, that is;
MUST BE pay in $, not goods or services
Holder must be able tell from instrument itself what amount is due
Payable to Order/Bearer (at time it is issued)
Instrument must contain certain magic words either:
Order language, or
Bearer language
Writing lacking these words is not negotiable
I promise to pay Paul= not negotiable
Exception: Checks --> "Pay Jake Sandlin" are fully negotiable
Payable on Demand or at a Definite Time
Holder must be able to tell when it comes due otherwise non-negotiable
Does not require a date
Undated instrument which specifies no time for payment treated as instrument payable on demand by holder
Ex. Post dated checks, note containing acceleration clause, note containing extension clause as long as extension is to a future definite time
Not: event certain to happen but uncertain as to time
Ex. When uncle mark dies : not negotiable
Does not State any unauthorized undertaking or instruction (by the person promising/ordering payment)
Must not be burdened by anything other than simple, clean unconditional promise or order
What is allowed: (things that strengthen a promise or order)
Undertaking or power to give, maintain, or protect collateral to secure payment;
Authorization or power to holder to realize on or dispose collateral
Waiver of benefit of law intended to benefit or protect obligor
Promise to pay costs of collection
NEGOTIATION
Assignment vs. Negotiation
If Assigned to 3rd Party:
3rd party= assignee & has only same rights as assignor does on instrument
Any defenses that could be raised against the payee could be raised against the assignee
If Negotiated to 3rd Party: (BETTER TO HAVE THIS)
3rd Party= A Holder
If holder gives value, takes in good faith, and w/o notice then HOLDER IN DUE COURSE (HIDC)!!!
HIDC will take free from most personal defenses that could have been raised against payee
Real defenses can be used against HIDC
How to Transfer
Order Paper: Transfer of Possession & Indorsement by Holder (Safer)
Holder: the identified person to whom the instrument is payable
Transfer may be voluntary or involuntary (Pick Pocket)
Indorsement:
Special Indorsement- Specifies to whom the instrument is payable
An instrument specially indorsed becomes order paper
Blank Indorsement- doesnβt specify the person to whom the instrument is payable; generally consists of just a mere signature
Blank indorsement makes instrument bearer paper
Bearer Paper: Transfer of Possession Alone
Transfer may be voluntary or involuntary (pick pocket)
Thief of bearer paper cannot be a HIDC but can transfer possession to another who can then become a HIDC!!
Exam Tip: looks at the last indorsement to determine whether the instrument is bearer paper or order paper
Special Rule:
Depository bank ( a bank in which an item is 1st deposited) that takes an unendorsed instrument for collection becomes a holder of the instrument IF the customer was a holder at time of delivery, even if customer has not indorsed the instrument
When order paper contains a forged indorsement, none of the parties from the forger on are holders--none have good title--none are entitled to the money
HOLDER IN DUE COURSE!!!!!!!!!!
Determined at the moment the instrument is negotiated to the holder AND she gives value therefor, whichever occurs later
So if transferee of negotiable instrument acquires notice of a claim or defense to the instrument prior to negotiation or giving value, they cant be a HIDC
Requirements
Holder;
In possession of bearer paper/ order paper properly indorsed to him
Who gives value;
A party is a HIDC only to the extent that the agreed upon consideration has been performed
Look for EXECUTED CONSIDERATION
Mere promise to pay not enough
Watch for discounts where only a % of consideration has been...
Buy the full version of these notes or essay plans and more in our Oklahoma Bar Bundle Outlines.
I entirely handwrote my notes for each subject of the bar exam and then used my notes to create my outlines for each subject. I passed the exam in 2012 on the first attempt. ...
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