BUSN 323 Lecture Notes - Lecture 9: Negotiable Instrument, Chapter 27, Security Interest
Document Summary
Bearer paper and order: bearer paper, payable to cash or whoever is in possession of instrument, requires only delivery of instrument to holder by payee, order paper, payable to specific, named payee, requires endorsement and delivery. Noncriminal endorsement problems: misspelled name: holder may endorse document with misspelled name, or both, payable to legal entity, examples of legal entity; estate, organization, partnership. Instrument may be endorsed by any authorized rep of entity: alternative/joint payees, alt payees, endorsement by any one of listed payees sufficient, joint payees, endorsement by all listed payees required. Advantages of hdc status: generally free from following personal defenses, lack or failure of consideration, breach of contract, fraud in the inducement in underlying contract. Illegality: duress, unauthorized completion or material alteration of instrument, unauthorized acquisition of instrument. Real defenses: subject to, fraud in essence, forgery, material alteration of completed instrument.
