1. Be signed by maker or drawer in writing(UCC 3-104)
2. Unconditional promise or order to pay(UCC 3-104(a))
3. Fixed amount in money(UCC 3-104(a))
4. Payable on demand or at a definite time(UCC 3-104(a)(2))
5. Payable to order or to bearer(UCC 3-104(a)(1))

No negotiability	Negotiability
IOU Conditional promise Conditional order	Reference Only out of BBB fund

Method of Negotiation

type	delivery	endorsement
		Method	Signiture	Order to pay
Order Paper	Required	blank endorsement	Required	Not required
		Special endorsement	Required	Required
Bearer Paper	Delivery alone	Not Required	Not Required	Not required

Takes instrument for value	Antecedent debt Past consideration Discount Not executory promise
Takes instrument in good faith
Takes instrument without notice of dishonor,defense or claim

Shelter rule

HDC's real defenses
• Discharge in insolvency proceeding or discharge in bankruptcy.
• Incapacity
• Forgery
• Fraud in the factum(essence)
• Material alternation
• Illegality
• Duress

	Primary liable	Secondary liable
Note	Maker	Endorser
Draft	Drawee	Drawer/Endorser
Check	None	Drawer=Depositor/Endorser
Certified check	Drawee=Bank	Drawer=Depositor

Requirements of claim to second liability

Presentment	Demand instruments	to drawer	30 days
		to endorser	7 days
	Time instruments	at a definite time
Notice of dishonor	By bank	midnight of next busineess day
	By party other than bank	midnight after 3 business days

• Impostors rule
• warranty liability
  1. The presenter has good title to the instrument.
  2. The presenter warrants that the instrument has not been materially altered.
  3. The presenter has no knowledge that the signature of the maker or drawer is unauthorized.
  4. The presenter warrants that there is no defense in the instrument.
  5. The presenter warrants that the maker or drawer is not insolvent.

• A bailee,such as a common carrier has liability for even slight negligence.
• A common carrier must exercise reasonable care with respect to the bailed property.