Key Terms

An initial notice
required by
federal law that
a collection
agency must
send a debtor,
informing the
debtor that he
or she has thirty
days to
challenge the
debt and
request
verification. A
set of rules
promulgated by
the Federal
Reserve Board
of Governors to
implement the
provisions of
the Truth-in-
Lending Act.
Advertising that
misleads
consumers,
either by
making
unjustified
claims
concerning a
product’s
performance or
by omitting a
material fact
concerning the
product’s
composition or
performance.
New advertising
that is
undertaken
pursuant to a
Federal Trade
Commission
order for the
purpose of
correcting
earlier false
claims that
were made
about a
product. An
administrative
or judicial order
prohibiting a
person or
business firm
from conducting
activities that an
agency or court
has deemed
illegal.
Advertising a
product at a
very attractive
price (the “bait”)
and then, once
the consumer is
in the store,
saying that the
advertised
product is either
not available or
is of poor
quality. The
customer is
then urged to
purchase
(“switched” to) a
more expensive
item. Chapter
38

validation
notice
Regulation Z
deceptive
advertising
counteradverti
sing
cease-and-
desist order
bait-and-
switch
advertising
Laws that allow
buyers a period
of time, such as
three days, in
which to cancel
door-to-door
sales contracts.
“cooling-off”
laws

Chapter 38
An initial notice required by federal law that a
collection agency must send a debtor, informing
the debtor that he or she has thirty days to
challenge the debt and request verification. A set
of rules promulgated by the Federal Reserve
Board of Governors to implement the provisions of
the Truth-in-Lending Act. Advertising that misleads
consumers, either by making unjustified claims
concerning a product’s performance or by omitting
a material fact concerning the product’s
composition or performance. New advertising that
is undertaken pursuant to a Federal Trade
Commission order for the purpose of correcting
earlier false claims that were made about a
product. An administrative or judicial order
prohibiting a person or business firm from “cooling-off” laws
conducting activities that an agency or court has
deemed illegal. Advertising a product at a very
attractive price (the “bait”) and then, once the
consumer is in the store, saying that the advertised
product is either not available or is of poor quality.
The customer is then urged to purchase
(“switched” to) a more expensive item.

validation notice
Regulation Z
deceptive advertising
counteradvertising
cease-and-desist order
Laws that allow buyers a period of time, such as three days, in which to cancel door-to-door sales contracts.
bait-and-switch advertising

Chapter 40
authorization card A card signed by an employee that gives a union permission to act on his or her behalf in negotiations with
cease-and-desist order An administrative or judicial order prohibiting a person or business firm from conducting activities tha
closed shop A firm that requires union membership by its workers as a condition of employment. The closed shop was made
collective bargaining The process by which labor and management negotiate the terms and conditions of employment, includ
employment at will A common law doctrine under which either party may terminate an employment relationship at any time fo
hot-cargo agreement An agreement in which employers voluntarily agree with unions not to handle, use, or deal in other emp
I-551 Alien Registration Receipt Commonly referred to as a “green card,” the I-551 Alien Registration Receipt is proof that a
I-9 verification All employers must verify the employment eligibility and identity of any worker hired in the United States. To co
minimum wage The lowest wage, either by government regulation or union contract, that an employer may pay an hourly wor
right-to-work law A state law providing that employees may not be required to join a union as a condition of retaining employm
secondary boycott A union’s refusal to work for, purchase from, or handle the products of a secondary employer, with whom
strike An action undertaken by unionized workers when collective bargaining fails. The workers leave their jobs, refuse to work
union shop A firm that requires all workers, once employed, to become union members within a specified period of time as a
vesting The creation of an absolute or unconditional right or power. The creation of an absolute or unconditional right or powe
whistleblowing An employee’s disclosure to government authorities, upper-level managers, or the press that the employer is
workers’ compensation laws State statutes establishing an administrative procedure for compensating workers’ injuries that
wrongful discharge An employer’s termination of an employee’s employment in violation of the law. An employer’s terminatio

A significant
change in
employment
status, such as a
change brought
about by firing or
failing to promote
an employee,
reassigning the
employee to a
position with
significantly
different
responsibilities,
or effecting a
significant
change in
employment
benefits. In the
employment
context, the
demanding of
sexual favors in
return for job
promotions or
other benefits, or
language or
conduct that is so
sexually offensive
that it creates a
hostile working
environment. In
regard to
employment
relationships, a
system in which
those who have
worked longest
for the employer
are first in line for
promotions,
salary increases,
and other
benefits. They
are also the last
to be laid off if the
workforce must
be reduced. A
group of persons
protected by
specific laws
because of the
group’s defining
characteristics.
Under laws
prohibiting
employment
discrimination,
these
characteristics
include race,
color, religion,
national origin,
gender, age, and
disability.
Treating
employees or job
applicants
unequally on the
basis of race,
color, national
origin, religion,
gender, age, or
disability;
prohibited by
federal statutes.
A form of
employment
discrimination
that results when
an employer
intentionally
discriminates
against
employees who
are members of
protected
classes. A form of
employment
discrimination
that results from
certain employer
practices or
procedures that,
although not
discriminatory on
their face, have a
discriminatory
effect. A
termination of
employment
brought about by
making the
employee’s
working
conditions so
intolerable that
the employee
reasonably feels
compelled to
leave. A defense
to allegations of
employment
discrimination in
which the
employer
demonstrates
that an
employment
practice that
discriminates
against members
of a protected
class is related to
job performance.
Identifiable
characteristics
reasonably
necessary to the
normal operation
of a particular
business. These
characteristics
can include
gender, national
origin, and
religion, but not
race. Job-hiring
policies that give
special
consideration to
members of
protected classes
in an effort to
overcome
present effects of
past
discrimination.
Chapter 41

tangible
employment
action
sexual
harassment
seniority system
protected class
employment
discrimination
disparate-
treatment
discrimination
disparate-
impact
discrimination
constructive
discharge
business
necessity
bona fide
occupational
qualification
(BFOQ)
affirmative
action
A case in which the plaintiff has produced sufficient evidence of his or her claim that the case can go to a jury; a case in
which the evidence compels a decision for the plaintiff if the defendant produces no affirmative defense or evidence to
disprove the plaintiff’s assertion.
prima facie case

Co-ownership
of property in
which each
party owns an
undivided
interest that
passes to her
or his heirs at
death. The joint
ownership of
property by a
husband and
wife. Neither
party can
transfer her or
his interest in
the property
without the
consent of the
other. Land and
everything
attached to it,
such as trees
and buildings.
Legally
protected rights
and interests in
anything with
an
ascertainable
value that is
subject to
ownership.
Property that is
movable; any
property that is
not real
property.
Property with
which the
owner has
voluntarily
parted and then
cannot find or
recover.
Property with
which the
owner has
involuntarily
parted and then
cannot find or
recover. The
joint ownership
of property by
two or more co-
owners in
which each co-
owner owns an
undivided
portion of the
property. On
the death of
one of the joint
tenants, his or
her interest
automatically
passes to the
surviving joint
tenant(s). A gift
made during
one’s lifetime
and not in
contemplation
of imminent
death, in
contrast to a
gift causa
mortis. A gift
made in
contemplation
of death. If the
donor does not
die of that
ailment, the gift
is revoked. Any
voluntary
transfer of
property made
without
consideration,
past or present.
An absolute
form of property
ownership
entitling the
property owner
to use,
possess, or
dispose of the
property as he
or she chooses
during his or
her lifetime. On
death, the
interest in the
property
descends to the
owner’s heirs.
A statute
defining finders’
rights in
property when
the true owners
are unknown.
Ownership
rights in
property,
including the
right to possess
and control the
property. An act
equivalent to
the actual,
physical
delivery of
property that
cannot be
physically
delivered
because of
difficulty or
impossibility.
For example,
the transfer of a
key to a safe
constructively
delivers the
contents of the
safe. The
mixing together
of goods
belonging to
two or more
owners so that
the separately
owned goods
cannot be
identified. Joint
ownership. A
form of
concurrent
ownership of
property in
which each
spouse
technically
owns an
undivided one-
half interest in
property
acquired during
the marriage.
All forms of
personal
property. One
who entrusts
goods to a
bailee. A
situation in
which the
personal
property of one
person (a
bailor) is
entrusted to
another (a
bailee), who is
obligated to
return the
bailed property
to the bailor or
dispose of it as
directed. One
to whom goods
are entrusted
by a bailor.
Occurs when
an individual
adds value to
personal
property by the
use of either
labor or
materials. In
some
situations, a
person may
acquire
ownership
rights in
another’s
property
through
accession.
Chapter 43

tenancy in
common
tenancy by the
entirety
real property
property
personal
property
mislaid
property
lost property
joint tenancy
gift inter vivos
gift causa
mortis
gift
fee simple
estray statute
dominion
constructive
delivery
confusion
concurrent
ownership
community
property
chattel
bailor
bailment
bailee
accession
Property with which the owner has voluntarily parted, with no intention of recovering it.
abandoned property

Chapter 45
inter vivos trust A trust created by the grantor (settlor) and effective during the grantor’s lifetime; a trust not established by a
per capita A Latin term meaning “per person.” In the law governing estate distribution, a method of distributing the prop
per stirpes A Latin term meaning “by the roots.” In estate law, a method of distributing an intestate’s estate so that each
mother or father) would have been entitled.
administrator One who is appointed by a court to handle the probate (disposition) of a person’s estate if that person dies in
bequest A gift of personal property by will (from the verb to bequeath).
binder A written, temporary insurance policy.
charitable trust A trust in which the property held by the trustee must be used for a charitable purpose, such as the advance
codicil A written supplement or modification to a will. A codicil must be executed with the same formalities as a will.
constructive An equitable trust that is imposed in the interests of fairness and justice when someone wrongfully holds lega
trust rightfully own the property.
devise As a noun, a gift of real property by will; as a verb, to make a gift of real property by will.
devisee One designated in a will to receive a gift of real property.
executor A person appointed by a testator in a will to see that her or his will is administered appropriately.
holographic will A will written entirely in the signer’s handwriting and usually not witnessed.
insurable An interest either in a person’s life or well-being or in property that is sufficiently substantial that insuring aga
interest (betting) contract.
insurance A contract in which, for a stipulated consideration, one party agrees to compensate the other for loss on a sp
intestacy laws State statutes that specify how property will be distributed when a person dies intestate (without a valid will);
intestate As a noun, one who has died without having created a valid will; as an adjective, the state of having died with
legacy A gift of personal property under a will.
legatee One designated in a will to receive a gift of personal property.
nuncupative will An oral will (often called a deathbed will ) made before witnesses; usually limited to transfers of personal pro
policy In insurance law, a contract between the insurer and the insured in which, for a stipulated consideration, the
premium In insurance law, the price paid by the insured for insurance protection for a specified period of time.
probate The process of proving and validating a will and settling all matters pertaining to an estate.
resulting trust An implied trust arising from the conduct of the parties. A trust in which a party holds the actual legal title to a
risk A prediction concerning potential loss based on known and unknown factors.
risk Planning that is undertaken to protect one’s interest should some event threaten to undermine its security. In
management company.
spendthrift trust A trust created to protect the beneficiary from spending all the funds to which she or he is entitled. Only a ce
attaching assets of the trust.
testamentary
A trust that is created by will and therefore does not take effect until the death of the testator.
trust
testate Having left a will at death.
testator One who makes and executes a will.
Totten trust A trust created by the deposit of a person’s own funds in his or her own name as a trustee for another. It is a
act or declaration.
trust An arrangement in which title to property is held by one person (a trustee) for the benefit of another (a benef
underwriter In insurance law, the insurer, or the one assuming a risk in return for the payment of a premium.
will An instrument directing what is to be done with the testator’s property on his or her death, made by the testa
will substitutes Various documents that attempt to dispose of an estate in the same or similar manner as a will, such as trus

Nonverbal
expressions of
beliefs. Symbolic
speech, which
includes gestures,
movements, and
articles of
clothing, is given
substantial
protection by the
courts. The
provision in
Article VI of the
Constitution that
provides that the
Constitution,
laws, and treaties
of the United
States are “the
supreme Law of
the Land.” Under
this clause, state
and local laws
that directly
conflict with
federal law will be
rendered invalid.
An order granted
by a public
authority, such as
a judge, that
authorizes law
enforcement
personnel to
search a
particular premise
or property. A
doctrine under
which certain
federal laws
preempt, or take
precedence over,
conflicting state or
local laws.
Powers
possessed by the
states as part of
their inherent
sovereignty.
These powers
may be exercised
to protect or
promote the
public order,
health, safety,
morals, and
general welfare.
The provision in
the First
Amendment to
the Constitution
that prohibits the
government from
interfering with
people’s religious
practices or forms
of worship. A
computer
program that is
designed to block
access to certain
Web sites based
on their content.
The software
blocks the
retrieval of a site
whose URL or
key words are on
a list within the
program. A
system of
government in
which the states
form a union and
the sovereign
power is divided
between the
central
government and
the member
states. The
provision in the
First Amendment
to the Constitution
that prohibits the
government from
establishing any
state-sponsored
religion or
enacting any law
that promotes
religion or favors
one religion over
another. The
provision in the
Fourteenth
Amendment to
the Constitution
that guarantees
that no state will
“deny to any
person within its
jurisdiction the
equal protection
of the laws.” This
clause mandates
that the state
governments
must treat
similarly situated
individuals in a
similar manner.
The provisions in
the Fifth and
Fourteenth
Amendments to
the Constitution
that guarantee
that no person
shall be deprived
of life, liberty, or
property without
due process of
law. Similar
clauses are found
in most state
constitutions. The
provision in
Article I, Section
8, of the U.S.
Constitution that
gives Congress
the power to
regulate interstate
commerce. The
principle under
which the powers
of the national
government are
divided among
three separate
branches—the
executive,
legislative, and
judicial branches
—each of which
exercises a check
on the actions of
the others.
Chapter 2

symbolic speech
supremacy
clause
search warrant
preemption
police powers
free exercise
clause
filtering software
federal form of
government
establishment
clause
equal protection
clause
due process
clause
commerce
clause
checks and
balances
The first ten amendments to the U.S. Constitution.
Bill of Rights
Chapter 4
res ipsa loquitur A doctrine under which negligence may be inferred simply because an event occurred, if it is the type o
actionable Capable of serving as the basis of a lawsuit. An actionable claim can be pursued in a lawsuit or other c
actual malice The deliberate intent to cause harm, which exists when a person makes a statement either knowing th
figure normally must be made with actual malice for the plaintiff to recover damages.
appropriation In tort law, the use by one person of another person’s name, likeness, or other identifying characteristic
assault Any word or action intended to make another person fearful of immediate physical harm; a reasonably
assumption of risk A doctrine under which a plaintiff may not recover for injuries or damage suffered from risks he or she
battery The unprivileged, intentional touching of another.
business invitee A person, such as a customer or a client, who is invited onto business premises by the owner of those
business tort Wrongful interference with another’s business rights.
causation in fact An act or omission without which an event would not have occurred.
comparative
A rule followed by most states in tort cases that reduces the plaintiff’s recovery in proportion to the plai
negligence
compensatory
A monetary award equivalent to the actual value of injuries or damage sustained by the aggrieved part
damages
contributory
A rule in tort law that completely bars the plaintiff from recovering any damages if the damage suffered
negligence
conversion Wrongfully taking or retaining possession of an individual’s personal property and placing it in the servi
cyber tort A tort committed in cyberspace.
damages Money sought as a remedy for a breach of contract or a tortious action.
defamation Anything published or publicly spoken that causes injury to another’s good name, reputation, or charac
defense A reason offered and alleged by a defendant in an action or suit as to why the plaintiff should not recov
disparagement of
An economically injurious falsehood made about another’s product or property; a general term for torts
property
dram shop act A state statute that imposes liability on the owners of bars and taverns, as well as those who serve alc
of alcoholic drinks contributed to the intoxication.
duty of care The duty of all persons, as established by tort law, to exercise a reasonable amount of care in their dea
constitutes the tort of negligence.
fraudulent
Any misrepresentation, either by misstatement or by omission of a material fact, knowingly made with t
misrepresentation
Good Samaritan
A state statute stipulating that persons who provide emergency services to, or rescue, someone in per
statute
intentional tort A wrongful act knowingly committed.
libel Defamation in writing or other form having the quality of permanence (such as a digital recording).
malpractice Professional misconduct or unreasonable lack of skill. The failure of a professional to use the degree o
claims to possess, resulting in injury, loss, or damage to those relying on the professional.
negligence The failure to exercise the standard of care that a reasonable person would exercise in similar circums
negligence per se An action or failure to act in violation of a statutory requirement.
predatory behavior Business behavior that is undertaken with the intention of unlawfully driving competitors out of the mar
privilege A legal right, exemption, or immunity granted to a person or a class of persons. In the context of defam
statements were malicious.
proximate cause Legal cause; exists when the connection between an act and an injury is strong enough to justify impo
puffery A salesperson’s often exaggerated claims concerning the quality of property offered for sale. Such clai
punitive damages Monetary damages that may be awarded to a plaintiff to punish the defendant and deter future similar
reasonable person
The standard of behavior expected of a hypothetical “reasonable person”; the standard against which n
standard
slander Defamation in oral form.
slander of quality The publication of false information about another’s product, alleging that it is not what its seller claims
slander of title The publication of a statement that denies or casts doubt on another’s legal ownership of any property
spam Bulk, unsolicited (“junk”) e-mail.
strict liability Liability regardless of fault. In tort law, strict liability is imposed on a manufacturer or seller that introduc
tort A civil wrong not arising from a breach of contract; a breach of a legal duty that proximately causes har
tortfeasor One who commits a tort.
trade libel The publication of false information about another’s product, alleging that it is not what its seller claims
trespass to land The entry onto, above, or below the surface of land owned by another without the owner’s permission o
trespass to personal
The unlawful taking or harming of another’s personal property; interference with another’s right to the e
property

Chapter 18
course of
Prior conduct between the parties to a contract that establishes a common basis for their understanding.
dealing
course of
The conduct that occurs under the terms of a particular agreement. Such conduct indicates what the parties t
performance
firm offer An offer (by a merchant) that is irrevocable without the necessity of consideration for a stated period of time o
merchant must be in writing and must be signed by the offeror.
intangible
Property that cannot be seen or touched but exists only conceptually, such as corporate stocks and bonds, p
property
lease Under Article 2A of the UCC, a transfer of the right to possess and use goods for a period of time in exchang
lease
In regard to the lease of goods, an agreement in which one person (the lessor) agrees to transfer the right to
agreement
lessee A person who acquires the right to the possession and use of another’s goods in exchange for rental paymen
lessor A person who transfers the right to the possession and use of goods to another in exchange for rental payme
merchant A person who is engaged in the purchase and sale of goods. Under the UCC, a person who deals in goods o
the practices or goods being purchased or sold [UCC 2–104].
output contract An agreement in which a seller agrees to sell and a buyer agrees to buy all or up to a stated amount of what
predominant-
A test courts use to determine whether a contract is primarily for the sale of goods or for the sale of services.
factor test
requirements
An agreement in which a buyer agrees to purchase and the seller agrees to sell all or up to a stated amount o
contract
sale The passing of title to property from the seller to the buyer for a price.
sales contract A contract for the sale of goods under which the ownership of goods is transferred from a seller to a buyer fo
seasonably Within a specified time period or, if no period is specified, within a reasonable time.
tangible
Property that has physical existence and can be distinguished by the senses of touch or sight. A car is tangib
property
usage of trade Any practice or method of dealing having such regularity of observance in a place, vocation, or trade as to jus

Chapter 19
bailee One to whom goods are entrusted by a bailor.
consignment A transaction in which an owner of goods (the consignor) delivers the goods to another (the consignee) for the
cure The right of a party who tenders nonconforming performance to correct that performance within the contract p
destination A contract for the sale of goods in which the seller is required or authorized to ship the goods by carrier and te
contract goods until they are tendered at the destination specified in the contract.
document of
A paper exchanged in the regular course of business that evidences the right to possession of goods (for exa
title
entrustment Under the Uniform Commercial Code Section 2–403(2), a rule stating that if goods are entrusted to a merchan
rule buyer in the ordinary course of business.
fungible goods Goods that are alike by physical nature, by agreement, or by trade usage (for example, wheat, oil, and wine th
risk can pass without actually separating the goods being sold from the mass of fungible goods.
good faith
A purchaser who buys without notice of any circumstance that would cause a person of ordinary prudence to
purchaser
identification In a sale of goods, the express designation of the goods provided for in the contract.
insolvent Under the UCC, a term describing a person who ceases to pay “his [or her] debts in the ordinary course of bu
law” [UCC 1–201(23)].
insurable In regard to the sale or lease of goods, a property interest in the goods that is sufficiently substantial to permit
interest well-being that is sufficiently substantial to justify insuring against injury to (or death of) the person.
sale on
A type of conditional sale in which the buyer may take the goods on a trial basis. The sale becomes absolute
approval
sale or return A type of conditional sale in which title and possession pass from the seller to the buyer, but the buyer retains
shipment A contract for the sale of goods in which the seller is required or authorized to ship the goods by carrier. The s
contract

Under the
Uniform
Commercial
Code, a
seller’s or
lessor’s act of
placing
conforming
goods at the
disposal of
the buyer or
lessee and
giving the
buyer or
lessor
whatever
notification is
reasonably
necessary to
enable the
buyer or
lessee to take
delivery An
action to
recover
identified
goods in the
hands of a
party who is
wrongfully
withholding
them from the
other party.
Under the
UCC, this
remedy is
usually
available only
if the buyer or
lessee is
unable to
cover. Under
the UCC, a
contract that
requires or
authorizes
delivery in two
or more
separate lots
to be
accepted and
paid for
separately. All
costs resulting
from a breach
of contract,
including all
reasonable
expenses
incurred
because of
the breach.
Under the
UCC, a
remedy that
allows the
buyer or
lessee, on the
seller’s or
lessor’s
breach, to
purchase
goods from
another seller
or lessor and
substitute
them for the
goods due
under the
contract. If the
cost of cover
exceeds the
cost of the
contract
goods, the
buyer or
lessee can
recover the
difference,
plus incidental
and
consequential
damages.
Chapter 20

tender of
delivery
replevin
installment
contract
incidental
damages
cover
Goods that conform to contract specifications.
conforming goods

Chapter 22
acceleration
A clause that allows a payee or other holder of a time instrument to demand payment of the entire amount du
clause
acceptance In contract law, a voluntary act by the offeree that shows assent, or agreement, to the terms of an offer; may c
presented.
acceptor drawee that is legally obligated to pay an instrument when it is presented later for payment.
allonge A piece of paper firmly attached to a negotiable instrument, on which transferees can make indorsements if th
bearer A person in possession of an instrument payable to bearer or indorsed in blank.
bearer
Any instrument that is not payable to a specific person, including instruments payable to the bearer or to “cash
instrument
blank
An indorsement that specifies no particular indorsee and can consist of a mere signature. An order instrumen
indorsement
certificate of
A note issued by a bank in which the bank acknowledges the receipt of funds from a party and promises to re
deposit (CD)
check A draft drawn by a drawer ordering the drawee bank or financial institution to pay a certain amount of money t
draft Any instrument drawn on a drawee that orders the drawee to pay a certain sum of money, usually to a third pa
drawee The party that is ordered to pay a draft or check. With a check, a bank or a financial institution is always the d
drawer The party that initiates a draft (such as a check), thereby ordering the drawee to pay.
extension
A clause in a time instrument that allows the instrument’s date of maturity to be extended into the future.
clause
holder Any person in possession of an instrument drawn, issued, or indorsed to him or her, to his or her order, to bea
indorsee The person to whom a negotiable instrument is transferred by indorsement.
indorsement A signature placed on an instrument for the purpose of transferring one’s ownership rights in the instrument.
indorser A person who transfers an instrument by signing (indorsing) it and delivering it to another person.
maker One who promises to pay a fixed amount of money to the holder of a promissory note or a certificate of depos
negotiable
A signed writing (record) that contains an unconditional promise or order to pay an exact sum on demand or a
instrument
negotiation A process in which parties attempt to settle their dispute informally, with or without attorneys to represent them
to whom the instrument is transferred) becomes a holder.
order
A negotiable instrument that is payable “to the order of an identified person” or “to an identified person or orde
instrument
payee A person to whom an instrument is made payable.
presentment The act of presenting an instrument to the party liable on the instrument to collect payment. Presentment also
promissory
A written promise made by one person (the maker) to pay a fixed amount of money to another person (the pa
note
qualified
An indorsement on a negotiable instrument in which the indorser disclaims any contract liability on the instrum
indorsement
restrictive
Any indorsement on a negotiable instrument that requires the indorsee to comply with certain instructions rega
indorsement
signature Under the UCC, “any symbol executed or adopted by a party with a present intention to authenticate a writing
special
An indorsement on an instrument that indicates the specific person to whom the indorser intends to make the
indorsement
trust
An indorsement for the benefit of the indorser or a third person; also known as an agency indorsement. The in
indorsement

Chapter 23
accommodation
A person who signs an instrument for the purpose of lending her or his name as credit to another party on
party
agent A person who agrees to represent or act for another, called the principal.
dishonor A negotiable instrument is dishonored when payment or acceptance of the instrument, whichever is requir
fictitious payee A payee on a negotiable instrument whom the maker or drawer does not intend to have an interest in the
holder in due A holder who acquires a negotiable instrument for value; in good faith; and without notice that the instrum
course (HDC) instrument contains unauthorized signatures, has been altered, or is so irregular or incomplete as to call in
imposter One who, by use of the mails, Internet, telephone, or personal appearance, induces a maker or drawer to
indorsements under Article 3 of the UCC.
personal defenses Defenses that can be used to avoid payment to an ordinary holder of a negotiable instrument but not a ho
presentment Implied warranties, made by any person who presents an instrument for payment or acceptance, that (1) t
warranties acceptance on behalf of a person who is entitled to enforce the instrument, (2) the instrument has not bee
instrument is unauthorized.
principal In agency law, a person who agrees to have another, called the agent, act on her or his behalf.
shelter principle The principle that the holder of a negotiable instrument who cannot qualify as a holder in due course (HDC
transfer warranties Implied warranties, made by any person who transfers an instrument for consideration to subsequent tran
all signatures are authentic and authorized; (3) the instrument has not been altered; (4) the instrument is n
knowledge of any insolvency proceedings against the maker, the acceptor, or the drawer of the instrumen
universal defenses Defenses that are valid against all holders of a negotiable instrument, including holders in due course (HD