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Drawers Drawers

Drawers - PowerPoint Presentation

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Uploaded On 2016-05-30

Drawers - PPT Presentation

To whom is Drawer liable 1 Holder person entitled to enforce 2 Indorser who has already paid the draft But liability is secondary two conditions precedent Conditions precedent to Drawers liability ID: 341354

problem check liability bank check problem bank liability drawee thumbprint stop payment conditions precedent presentment payee account waiver limitation

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Presentation Transcript

Slide1

DrawersSlide2

To whom is Drawer liable?

1. Holder (person entitled to enforce)

2. Indorser who has already paid the draft

But, liability is secondary – two conditions precedent.Slide3

Conditions precedent to Drawer’s liability

1. Presentment to Drawee

Within

30 days of

issue.

But

,

untimely presentment is only a

problem if drawee becomes

insolvent.Slide4

Conditions precedent to Drawer’s liability

2. Dishonor by Drawee

The drawee refuses to pay, e.g.,

Insufficient funds

Stop payment

Check is “stale”

WrongfullySlide5

Limitation of Liability

Check = limitation not possible.

Non-check draft = may draw “without recourse.”Slide6

Problems

Problem 141 – p. 446

Problem 142 – p. 447Slide7

Messing v. Bank of America

– p.447

Issue = May bank require non-account holder to provide thumbprint signature before it will honor a check?Slide8

Thumbprint Signatures

But, what if payee has no biological arms?Slide9

Thumbprint Signatures

BoA

refused

to cash check (from his wife who had an account) as he could not make a thumbprint signature.Slide10

Waiver of condition precedents

Problem 143, p. 454

Is a waiver allowed?

If so, will it prevent instrument from being negotiable?Slide11

Problem 144 – p. 454

Dan Frank [

Δ

]

Drawer Payee

Indorser

Drawee Bank

Holdit

[

π

]

Creditor’s National

Depositary Bank

Issuance

Request to stop payment

Stop payment order

Presentment

Dishonor

Charge back