Chapter 32 - Negotiation and holder in due course. After completing this chapter, students will be able to: Explain the process of transferring negotiable instruments from one person to another; distinguish order paper from bearer paper, and blank, special, restrictive, and qualified indorsements; identify and explain requirements for becoming a holder in due course. | Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin 7 Negotiable Instruments Negotiation and Holder in Due Course Liability of Parties Checks and Electronic Transfers Commercial Paper P A R T Negotiation and Holder in Due Course P A E T R H C 32 Behind all its global responsibilities and impersonal style banking is still a ‘people business’ it may be the most personal business of all for it always depends on the original concept of credit, meaning trust. Anthony Sampson, The Moneylenders: Bankers in a Dangerous World (1981) Learning Objectives Explain the process of transferring negotiable instruments from one person to another Distinguish order paper from bearer paper, and blank, special, restrictive, and qualified indorsements Identify and explain requirements for becoming a holder in due course Under UCC Revised Article 3, negotiation is the transfer of voluntary or involuntary possession of a negotiable instrument by a person (other than | Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin 7 Negotiable Instruments Negotiation and Holder in Due Course Liability of Parties Checks and Electronic Transfers Commercial Paper P A R T Negotiation and Holder in Due Course P A E T R H C 32 Behind all its global responsibilities and impersonal style banking is still a ‘people business’ it may be the most personal business of all for it always depends on the original concept of credit, meaning trust. Anthony Sampson, The Moneylenders: Bankers in a Dangerous World (1981) Learning Objectives Explain the process of transferring negotiable instruments from one person to another Distinguish order paper from bearer paper, and blank, special, restrictive, and qualified indorsements Identify and explain requirements for becoming a holder in due course Under UCC Revised Article 3, negotiation is the transfer of voluntary or involuntary possession of a negotiable instrument by a person (other than issuer) to another person who becomes its holder [3–201] Order paper: instrument is payable to the order of a specific payee Bearer paper: instrument is payable “to bearer” or “to cash” Overview When an employer gives an employee a paycheck payable “to the order of Susan Adams,” she is the holder of the check because she is in possession of an instrument payable to an identified person (Susan Adams) and she is that person. A person is a holder if in possession of an instrument: (1) that is payable to bearer or Negotiated by mere transfer of possession of paper [3–201(b)] (2) made payable to an identified person and she is that identified person [1–201(20)] Negotiated by transfer of possession of paper after indorsement by the payee [3–201(b)] Indorsement is a signature that, alone or with other words, is made on an instrument for a specific purpose Signature may not be that of the maker, drawer, or acceptor Indorsement is required for negotiation except in the case of depositary .
