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This might be the most frustrating subject of all time.

MSUlaw49 wrote:This might be the most frustrating subject of all time.

Truth.

I think the hardest thing to get a handle on is what the disputes are even about and who they're between. Basically, you want to proceed in this way:

1. Who is suing whom, exactly?

2. Are they suing over a negotiable instrument? Apply elements of a negotiable instrument. If it's not a valid negotiable instrument, then your Commercial Paper problem has officially ended and the plaintiff will need some other type of action, such as a contract breach.

3. Is the plaintiff (the person suing because they got screwed) a holder of the instrument? (Does the plaintiff have a right to sue over the instrument?) Apply elements for a holder. (In plain English, it's not like I can pick up a check off the sidewalk that was written to someone named Timothy, and sue on his behalf. I have to be a valid holder of the check. This usually means I paid value for the check, or someone wrote it out to me, or someone who was a previous holder indorsed me on the check.)

4. Did the person sued do anything -- i.e. sign, create or guaranty (warranty) anything -- to make them accountable to the plaintiff? In other words, did the defendant sign, create, present or indorse a valid negotiable instrument and give it or cause it to be given to someone else?

5. If yes, does the defendant have any defenses or waivers against being held liable they can make? (Make sure they didn't waive liability in the indorsement of the check. Meanwhile, fraud in the factum and fraud in the inducement are going to be the most common defenses, especially if a thief is involved. But remember, there are two types of defenses, and the distinction between them matters.)

6. Is the person suing them a holder in due course? (This matters because it limits the defenses; fraud in the inducement is the big one that doesn't apply to protect you when the plaintiff is a holder in due course.) Apply the elements to HDC status, the most important being: did a valid holder give value for the check?

7. Okay, so the defendant's getting sued and has no defenses that apply, either because the plaintiff is a HDC that limits his available defenses, or because the plaintiff is just a regular holder but no defenses of any kind are applicable. But can the defendant kick liability down to someone else? (Ex: A presentment warranty is typically violated by the person who presents the non-payable check to the bank, so the presenter is the first to get sued, but they may in turn have an action against the person who transferred to them the check, and that transferor may in turn have another action against a previous transferor or perhaps the drawer of the check.)


Review one of your previous or current Commercial Paper essay problems, and try just issue spotting for an issue involving one of those seven steps. Hope this helps.

that was actually really helpful thanks. I don't think I will ever fully understand the topic in time but I can just hope for a couple essay points in th event they want to put a worthless subject on the BAR

MSUlaw49 wrote:that was actually really helpful thanks. I don't think I will ever fully understand the topic in time but I can just hope for a couple essay points in th event they want to put a worthless subject on the BAR

Yeah, my Commercial Paper lecturer was awful. He didn't explain what any of the material actually means in a real life context. To get points on this essay, you shouldn't have to stress about the minutia. Just familiarize yourself with the general elements for each step, not worrying about the specifics, and you'll probably be able to at least put the tip of your finger on the problem when you read the essay fact pattern. Even if you miss the ultra-detailed fact that turns on an advanced sub-element, you'll still 90% of the points for spotting the big stuff and articulating it in plain English with a few buzzwords interspersed throughout.