COVERAGE - - Liabilities to Notice of Dishonor [Master and memorize SEC 60-118] [aw ky insurance, lol] QUESTIONS (so far

) [not in toto but with same idea] 1. When notice of dishonor is by letter, what are the requisites?

2. What are the instances when notice need not be given? Section 114. When notice need not be given to drawer. Notice of dishonor is not required to be given to the drawer in either of the following cases: (a) Where the drawer and drawee are the same person; (b) When the drawee is a fictitious person or a person not having capacity to contract; (c) When the drawer is the person to whom the instrument is presented for payment; (d) Where the drawer has no right to expect or require that the drawee or acceptor will honor the instrument; (e) Where the drawer has countermanded payment.

Section 115. When notice need not be given to indorser. Notice of dishonor is not required to be given to an indorser in either of the following cases: (a) When the drawee is a fictitious person or person not having capacity to contract, and the indorser was aware of that fact at the time he indorsed the instrument; (b) Where the indorser is the person to whom the instrument is presented for payment; (c) Where the instrument was made or accepted for his accommodation.

3. Distinguish the liabilities between a maker and a drawer. Section 60. Liability of maker. The maker of an instrument, by making it, engages that he will pay it according to its tenor, and admits the existence of the payee and his then capacity to indorse. Section 61. Liability of drawer. The drawer, by drawing an instrument, admits the existence of the payee and his then capacity to indorse; and engages that on due presentment, the instrument will be accepted or paid, or both, according to its tenor, and that if it be dishonored and the necessary proceedings on dishonor be duly taken, he will pay the amount thereof to the holder or to any subsequent indorser who may be compelled to pay it. But the drawer may insert in the instrument an express stipulation negativing or limiting his own liability to the holder.

4. What is an irregular indorser? What are his liabilities? Section 64. Liability of irregular indorser. Where a person, not otherwise a party to an instrument, places thereon his signature in blank before delivery, he is liable as indorser, in accordance with the following rules: (a) If the instrument is payable to the order of a third person, he is liable to the payee and to all subsequent parties; (b) If the instrument is payable to the order of the maker or drawer, or is payable to bearer, he is liable to all parties subsequent to the maker or drawer; (c) If he signs for the accommodation of the payee, he is liable to all parties subsequent to the payee.

5. Distinguish the warranties between a general indorser and qualified indorser. Section 65. Warranty where negotiation by delivery and so forth. Every person negotiating an instrument by delivery or by a qualified indorsement warrants: (a) That the instrument is genuine and in all respects what it purports to be; (b) That he has a good title to it; (c) That all prior parties had capacity to contract; (d) That he has no knowledge of any fact which would impair the validity of the instrument or render it valueless.

But when the negotiation is by delivery only, the warranty extends in favor of no holder than the immediate transferee. The provisions of subdivision (c) of this section do not apply to a person negotiating public or corporation securities other than bills and notes. Section 66. Liability of general indorser. Every indorser who indorses without qualification, warrants to all subsequent holders in due course: (a) The matters and things mentioned in subdivisions (a), (b), and (c) of the next preceding section; and (b) That the instrument is, at the time of his indorsement, is valid and subsisting. And, in addition, he engages that, on due presentment, it shall be accepted or paid, or both, as the case may be, according to its tenor, and that if it be dishonored and the necessary proceedings on dishonor be duly taken, he will pay the amount thereof to the holder, or to any subsequent indorser who may be compelled to pay it.

6. What is payment in due course? If maker pays before maturity, is the instrument discharged? Section 88. What constitutes payment in due course. Payment is made in due course when it is made at or after the maturity of the payment to the holder thereof in good faith and without notice that his title is defective.

--- "If payment is made before maturity, it would constitute a negotiation back to the person primarily liable and he can re-negotiate it. The payment does not discharge the instrument." --Chase v. Commerce Trust Co., 224 Pac. 148.

7. What is presentment for payment? --- "By presentment is meant the production of a bill of exchange to the drawee for his acceptance, or to the drawee or acceptor for payment or the production of the promissory note to the party liable for payment of the same." --- Windham Bank v. Norton. 22 Conn. 213, 56 Am. Dec.379. --- "Presentment for payment consists of a (1) personal demand for payment at the proper place (2) with the bill or note in readiness to exhibit it if required, and to receive payment and surrender it if the debtor is willing to pay." --- See Chase v. Le Monte, 162 N.Y.S. 982.

8. What are the effects of the acceptor s admissions? Effects of acceptor's admissions: (1) The acceptor is consequently precluded from setting up the defense that the drawer is nonexistent or fictitious because of his admission of the drawer's existence; (2) Neither can he claim that the drawer's signature is a forgery because he admits the genuineness of the drawer's signature;

(3) Neither can the drawee escape liability by alleging want of consideration between him and the drawer as, by accepting the bill, he admits the capacity and authority of the drawer to draw the bill. For the same reason, the better rule seems to be that the acceptor is liable on the bill even if the drawer has overdrawn his account.

9. When is there a dishonor by non-payment? What are the recourse of the holder when the instrument is dishonor by non-payment? Section 83. When instrument dishonored by nonpayment. The instrument is dishonored by nonpayment when: (a) It is duly presented for payment and payment is refused or cannot be obtained; or (b) Presentment is excused and the instrument is overdue and unpaid. Section 84. Liability of person secondarily liable, when instrument dishonored. Subject to the provisions of this Act, when the instrument is dishonored by non-payment, an immediate right of recourse to all parties secondarily liable thereon accrues to the holder.

10. What are the necessary steps to charge the person secondarily liable in a bill of exchange?

11. What is implied waiver of presentment? Give two (2) examples. --- "Implied waiver of presentment may be manifested by any language or conduct or any agreement between the parties reasonably calculated to lead the holder to believe that presentment is waived or to mislead or prevent him from treating the bill as he otherwise would." --- Simonoff v. Granite City Nat. Bank, 279 Ill. 248, 116 N.E. 686 EXAMPLES [select 2] : Declarations, acts or conduct which mislead the holder and induce him from taking the necessary steps to make presentment. 2. Drawer A tells holder F that he will take care of collecting the bill. This is waiver on his (A's) part, and if F fails to make presentment, A is not discharged. 3. Holder failed to make presentment to the drawee. Thereafter, the drawer paid part of the bill and promised orally to pay the rest. This is implied waiver of presentment. 4. Where the maker, before maturity of the note, was adjudged a bankrupt partly upon his written admission of inability to pay the debts with a willingness that he be adjudged a bankrupt. 5. Where the indorsers of a note payable at a bank had assured the holder that it could not be paid at maturity and knew that the maker, a corporation, had no money to pay for it. 1.

Where the indorser assured the holder, before maturity of the note, that a note for the same amount with his indorsement will be given in renewal, such assurance, if relied by the holder. 7. When the maker on the day of maturity of the note telephoned the holder that he could not then pay the note and the holder then telephoned the maker consenting in giving further time to the maker. 6.

12. When is exhibiting instrument not required? Exhibition of the instrument is not required or necessary in the following cases: (1) When the debtor does not demand to see the instrument but refuses payment on some other grounds, and (2) When the instrument is lost or destroyed.

13. Why is there a need of presentment for payment? (correct me if i'm wrong here) Presentment for payment is necessary to charge the person secondarily liable on the instrument subject to the exceptions in the following: (a) as to drawer, under Section 79; (b) as to indorser, under Section 80; (c) when dispensed with under Section 82; and

(d) when the instrument has been dishonored by non-acceptance.

14. What is protest? A protest is formal instrument, executed by a notary or other competent person, certifying that the facts necessary to the dishonor of the instrument by non-acceptance or non-payment have taken place.

15. What are the requisites of protest? A protest is made by a notary or by a respectable citizen of the place of dishonor of the bill in the presence of two or more credible witnesses. It must be annexed to the bill, or must contain a copy thereof, and must specify: (1) the time and place of presentment, (2) the fact that presentment was made and the manner thereof, (3) the cause of protest, (4) the demand made and answer given, or that the drawee or the acceptor could not be found.

16. What constitutes sufficient payment? Section 72. What constitutes a sufficient presentment. Presentment for payment, to be sufficient, must be made (a) By the holder, or by some persons authorized to receive payment on his behalf; (b) (c) At a reasonable hour on a business day; At a proper place as herein defined;

(d) To the person primarily liable on the instrument, or if he is absent or inaccessible, to any person found at the place where the presentment is made.