Forgery – counterfeit-making or fraudulent alteration of
any writing, and may consist in the signing of another’s
name or the alteration of an instrument in the name,
amount, description of the person and the like, with the
intent thereby to defraud.
Holder for value – one who has given a valuable
consideration for the instrument issued or negotiated to
him.
Accommodation note or bill – accommodation party
has put his name, without consideration, for the
purpose of accommodating some other party who is to
use it, and is expected to pay it.
Accommodation party – one who has signed the
instrument as maker, drawer, acceptor, or indorser,
without receiving value therefor and for the purpose of
lending his name to another party.
Negotiation – the transfer of a negotiable instrument
from one person to another made in such a manner as
to constitute the transferee the holder thereof.
Indorsement – the writing of the name of the payee on
the instrument with the intent either to transfer the
title to the same, or to strengthen the security of the
holder by assuming a contingent liability for its future
payment, or both.
Recourse – resort to a person who is secondary liable
after the default of the person who is primarily liable.
Ordinary/Mere Holder – person who qualifies as a
holder but does not meet all the conditions to qualify as
a holder in due course.
Holder in due course – he takes the instrument free of
most defenses or adverse claim to it by other parties.
Defenses – grounds or reasons pleaded or offered by
the defendant in a case, showing why the plaintiff, as a
matter of law or fact, should not be given the relief he
seeks.
Real defenses – cases when holder in due course is not
legally entitled to payment from the primary party.
Personal defenses – available to prior parties among
themselves but which are not good against a holder in
due course. Includes every defense available in actions
under ordinary contract law.
Liability – obligation of a party to a negotiable
instrument to pay the same according to its terms.
Stop payment – request made to a financial institution
to cancel a check or payment that has not yet been
processed. It is issued by the account holder and can
only be enacted if the check or payment has not already
been processed by the recipient.
Title – a right or claim to the ownership of a negotiable
instrument; delivery: bearer; delivery and signature:
order
Dishonor – refusal of payee to pay the instrument
Simple loan – contract of mutuum
Safekeeping – depositum
IPV – a person who purchases in good faith a title to
property without notice of any defect and for a valuable
consideration
Special indorsement – one where the name of the
payee is specified. Specifies the person to whom, or to
whose order, the instrument is to be payable, and the
indorsement of such indorsee is necessary to the
further negotiation of the instrument.
Restrictive indorsement – one so worded that it either
restricts or prohibits entirely the further negotiation of
an instrument, or modifies the rights of the holder or
the liabilities of the indorser.
Qualified indorsement – one which constitutes the
indorser a mere assignor of the title to the instrument.
Absolute indorsement – one by which the indorser
binds himself to pay, upon no other condition than he
failure of prior parties to do so, and of due notice to him
of such failure.