CHARTING THE WAY THROUGH THE TRANSFER OF COMMERCIAL PAPER

• Published date: 01 December 1995
• Date: 01 December 1995
• Author: Janell M. Kurtz,Wayne R. Wells
• DOI: http://doi.org/10.1111/j.1744-1722.1995.tb00123.x

CHARTING THE WAY THROUGH

THE

TRANSFER

OF

COMMERCIAL PAPER

Commercial paper is one of the most difficult subjects for business

law instructors to teach and for students to comprehend. In covering

the material, a compartmentalized approach is usually used to teach

the material. Each component of commercial paper: negotiability,

negotiation, and holder in due course status, is examined separately.

There

is

little, if any, emphasis on how these pieces fit together until

the topic of defenses

is

presented. Because of this approach and the

amount of time needed to cover each of the component parts, students

generally do not recognize the significance

of

negotiable paper and

holder in due course status until they are at the end

of

the material.

The

flow

chart presented in this teaching tip has been used success-

fully to present commercial paper as an integrated topic.

The introduction of commercial paper through the flow chart pro-

vides students with

a

visual overview

of

the analysis involved in

studying commercial paper. The first column

sets

forth the initial

step in the analysis: classifying the commercial paper according to

whether it is negotiable

or

nonnegotiable. The arrows flowing from

the type of commercial paper indicate the possible methods by which

it may be transferred. The chart clearly demonstrates that non-

negotiable commercial paper can only be assigned, while negotiable

commercial paper may be either assigned

or

negotiated. When

the

commercial paper is negotiable, the chart leads students to

the

next

step in the analysis: determining the method of transfer.

If

the