[MCLKT]

I’m confused… wouldn’t Cox have a REAL defense that the negotiable instrument was acquired illegally, or it was fraud or something that would beat the Holder in Due Course status? How can Archer prevail?

https://postimg.org/image/7c4j3b03r/

Seattle I need you, lol…

A:[73]97 F:[74]85 R:86 B:[74]82
*NINJA 10 Pt. COMBO & Yaeger*

[rupert]

Real defenses are:

– Minority

– Any defense which renders the original contract void

– Forgery (with a few exceptions)

– Material Alteration

Nothing in the question indicates any of the above defenses apply. The question only says posession of a **bearer** negotiable instrument. We don't know anything about the original contract, so no way to tell if something would render it void. No forgery necessary because there will be no signature required (bearer instrument). No minors invovled based on the facts provided. Finally, the question doesn't mention antything about a material alteration.

My instructor recommended memorizing this list. If it's not on this list, then assume it is a personal defense.

Just my $.02.

FAR 90 Oct. 6, 2012
AUD 96 Dec. 8, 2012
REG 93 May 30, 2013
BEC 84 Aug. 31, 2013

NIU CPA Review Correspondence and Wiley Test Bank

[rupert]

Real defenses are:

– Minority

– Any defense which renders the original contract void

– Forgery (with a few exceptions)

– Material Alteration

Nothing in the question indicates any of the above defenses apply. The question only says posession of a **bearer** negotiable instrument. We don't know anything about the original contract, so no way to tell if something would render it void. No forgery necessary because there will be no signature required (bearer instrument). No minors invovled based on the facts provided. Finally, the question doesn't mention antything about a material alteration.

My instructor recommended memorizing this list. If it's not on this list, then assume it is a personal defense.

Just my $.02.

FAR 90 Oct. 6, 2012
AUD 96 Dec. 8, 2012
REG 93 May 30, 2013
BEC 84 Aug. 31, 2013

NIU CPA Review Correspondence and Wiley Test Bank

[SeattleAccountant]

@MCKLT< Alright, LOL. I'm a bit of turnip tonight having just finished side-by-side 2 years worth of AICPA Reg releases and barely awake. So, I hope stuff below makes sense :)>

Illegality for the purposes of real defense applies to situations when instrument was ISSUED for something illegal like MFHP (murder-for-hire-plot, pmt for drugs, etc). Compare that to the illegally OBTAINED, i.e. stolen = theft of the instrument is a personal not real defense!

Recall that in order to become an HDC one needs to:

1. Take instrument for value (consideration was paid, yes),

2. In good faith (yes)

3. Without notice i.e. there must be no knowledge of various things (having newspaper ad is not enough; must know personally)

4. Instrument must be negotiable in the first place (we are told it was “negotiated”).

Archer, the good guy, did all the right things on his part to become a holder in due course and will be entitled to payment b/c no applicable real defense exists in this situation.

Becker Class of Jan - Aug 2013: FARB DONE!!!!
CPA license pending 🙂

[SeattleAccountant]

@MCKLT< Alright, LOL. I'm a bit of turnip tonight having just finished side-by-side 2 years worth of AICPA Reg releases and barely awake. So, I hope stuff below makes sense :)>

Illegality for the purposes of real defense applies to situations when instrument was ISSUED for something illegal like MFHP (murder-for-hire-plot, pmt for drugs, etc). Compare that to the illegally OBTAINED, i.e. stolen = theft of the instrument is a personal not real defense!

Recall that in order to become an HDC one needs to:

1. Take instrument for value (consideration was paid, yes),

2. In good faith (yes)

3. Without notice i.e. there must be no knowledge of various things (having newspaper ad is not enough; must know personally)

4. Instrument must be negotiable in the first place (we are told it was “negotiated”).

Archer, the good guy, did all the right things on his part to become a holder in due course and will be entitled to payment b/c no applicable real defense exists in this situation.

Becker Class of Jan - Aug 2013: FARB DONE!!!!
CPA license pending 🙂

[MCLKT]

Thank you both so much.

I was all on board for Archer being a HIDC, but I was hung up on the legal thing.

Illegally OBTAINED vs. illegally ISSUED is what I need to understand. Got it.

Thanks again!

@Seattle LOL, turnip. I hope you're scoring well on your reviews. All of this will pay off on our nonNASBA score release days 🙂

A:[73]97 F:[74]85 R:86 B:[74]82
*NINJA 10 Pt. COMBO & Yaeger*

[MCLKT]

Thank you both so much.

I was all on board for Archer being a HIDC, but I was hung up on the legal thing.

Illegally OBTAINED vs. illegally ISSUED is what I need to understand. Got it.

Thanks again!

@Seattle LOL, turnip. I hope you're scoring well on your reviews. All of this will pay off on our nonNASBA score release days 🙂

A:[73]97 F:[74]85 R:86 B:[74]82
*NINJA 10 Pt. COMBO & Yaeger*

[mcarras]

I have a question about a problem from the Wiley Sample Exam.

2013 Sample Testlet 3 # 6

Your client has in its possession the following instrument.

$700,000 Provo, UT May 1, 2002

Thirty days after date I promise to pay to the order of

Cash

Seven Hundred Dollars

at Boise, Idaho

Value received with interest at the rate of 10% per annum.

This instrument is secured by a conditional sales contract.

The instrument is:

A. A negotiable time draft.

B. A nonnegotiable note since it states that it is secured by a conditional sales contract.

C. Not negotiable until June 1, 2002

D. A negotiable bearer note.

The correct answer was “D”.

I selected “B” because I thought that the conditional contract destroys negotiability.

Can anyone help? Thanks.

[mcarras]

I have a question about a problem from the Wiley Sample Exam.

2013 Sample Testlet 3 # 6

Your client has in its possession the following instrument.

$700,000 Provo, UT May 1, 2002

Thirty days after date I promise to pay to the order of

Cash

Seven Hundred Dollars

at Boise, Idaho

Value received with interest at the rate of 10% per annum.

This instrument is secured by a conditional sales contract.

The instrument is:

A. A negotiable time draft.

B. A nonnegotiable note since it states that it is secured by a conditional sales contract.

C. Not negotiable until June 1, 2002

D. A negotiable bearer note.

The correct answer was “D”.

I selected “B” because I thought that the conditional contract destroys negotiability.

Can anyone help? Thanks.

[mcarras]

I have a question about a problem from the Wiley Sample Exam.

2013 Sample Testlet 3 # 6

Your client has in its possession the following instrument.

$700,000 Provo, UT May 1, 2002

Thirty days after date I promise to pay to the order of

Cash

Seven Hundred Dollars

at Boise, Idaho

Value received with interest at the rate of 10% per annum.

This instrument is secured by a conditional sales contract.

The instrument is:

A. A negotiable time draft.

B. A nonnegotiable note since it states that it is secured by a conditional sales contract.

C. Not negotiable until June 1, 2002

D. A negotiable bearer note.

The correct answer was “D”.

I selected “B” because I thought that the conditional contract destroys negotiability.

Can anyone help? Thanks.

[mcarras]

I have a question about a problem from the Wiley Sample Exam.

2013 Sample Testlet 3 # 6

Your client has in its possession the following instrument.

$700,000 Provo, UT May 1, 2002

Thirty days after date I promise to pay to the order of

Cash

Seven Hundred Dollars

at Boise, Idaho

Value received with interest at the rate of 10% per annum.

This instrument is secured by a conditional sales contract.

The instrument is:

A. A negotiable time draft.

B. A nonnegotiable note since it states that it is secured by a conditional sales contract.

C. Not negotiable until June 1, 2002

D. A negotiable bearer note.

The correct answer was “D”.

I selected “B” because I thought that the conditional contract destroys negotiability.

Can anyone help? Thanks.

[UCMCPA]

His requirement to pay is not conditional, only the “irrelevant” insurance he is giving about where the money may be coming from. Even if he doesn't complete that sales contract he is “securing” his obligation to pay the 700,000 with, he still has to pay, he will just have to source the money from elsewhere.

FAR - 84
AUD - 94
REG - 86
BEC - 86

[UCMCPA]

His requirement to pay is not conditional, only the “irrelevant” insurance he is giving about where the money may be coming from. Even if he doesn't complete that sales contract he is “securing” his obligation to pay the 700,000 with, he still has to pay, he will just have to source the money from elsewhere.

FAR - 84
AUD - 94
REG - 86
BEC - 86

[Author]

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