In Oklahoma, under UCC Article 3, a holder in due course (HDC) takes an instrument free from most defenses and claims that a prior party could assert against the original payee. However, certain real defenses, which go to the validity of the instrument itself, can be asserted even against an HDC. These real defenses are specifically enumerated in UCC § 3-305(a)(1) and include, among others, infancy, duress that nullifies assent, fraud that nullifies assent, and discharge in insolvency proceedings. Personal defenses, on the other hand, such as breach of contract, failure of consideration, or fraud in the inducement, are cut off by an HDC. The scenario describes a promissory note for a vintage automobile purchased by Ms. Albright from “Classic Rides Inc.” The note was subsequently negotiated to Mr. Sterling, who then seeks to enforce it against Ms. Albright. Ms. Albright’s defense is that Classic Rides Inc. misrepresented the condition of the automobile, which constitutes fraud in the inducement. This is a personal defense. For Mr. Sterling to be an HDC, he must take the note for value, in good faith, and without notice of any claim or defense. Assuming Mr. Sterling meets these criteria, he would take the note free from Ms. Albright’s personal defense of fraud in the inducement. Therefore, Mr. Sterling can enforce the note against Ms. Albright despite the misrepresentation.

The core issue revolves around the concept of a holder in due course (HDC) and the defenses available against such a holder. Under Oklahoma’s version of UCC Article 3, a holder in due course takes an instrument free of most claims to it or defenses against it. However, certain defenses, known as real defenses, can be asserted even against an HDC. These real defenses are enumerated in UCC § 3-305(a)(1) and include, among others, infancy, duress that nullifies assent, fraud that nullifies assent, and discharge in insolvency proceedings. Personal defenses, on the other hand, such as breach of contract or failure of consideration, are generally cut off by an HDC. In this scenario, the promissory note was transferred to a bank, which is presumed to be an HDC unless evidence suggests otherwise. The defense of failure of consideration is a personal defense. Therefore, the bank, as an HDC, would generally be able to enforce the note against the maker, even though the underlying contract for the antique clock failed. The maker’s recourse would be against the transferor of the note, not against the HDC bank.

The core concept here is the distinction between a holder in due course (HDC) and a holder who takes an instrument subject to claims and defenses. Under Oklahoma’s adoption of UCC Article 3, specifically focusing on the requirements for a holder to achieve HDC status, the instrument must be negotiable, signed by the maker or drawer, an unconditional promise or order to pay a fixed amount of money, payable on demand or at a definite time, payable to order or to bearer, and if it is an order instrument, it must be payable to a person or the order of a person. Furthermore, the holder must take the instrument for value, in good faith, and without notice of any claim to the instrument or defense against it. In this scenario, Ms. Albright’s knowledge of the underlying contract dispute between the original parties at the time she acquired the note prevents her from being a holder in due course. Oklahoma law, as reflected in UCC § 3-302, defines a holder in due course as a holder who takes the instrument (i) for value, (ii) in good faith, and (iii) without notice that any party has a defense or claim of any kind. Ms. Albright’s actual knowledge of the breach of contract constitutes notice of a defense. Therefore, she takes the note subject to the defenses available to Mr. Henderson against the original payee.

The scenario describes a promissory note issued by a sole proprietorship, “Prairie Winds Ranch,” to “Cimarron Capital LLC.” The note states it is payable “on demand, but no later than December 31, 2024.” This “on demand” clause, coupled with a fixed maturity date, creates a potential ambiguity regarding the exact nature of the instrument. Under Oklahoma’s Uniform Commercial Code (UCC) Article 3, a negotiable instrument must be payable on demand or at a definite time. A demand instrument is payable immediately upon presentation. However, the inclusion of a specific future date as a *limit* to the demand payment does not, in itself, make the instrument non-negotiable. The UCC permits instruments to be payable on demand or at a definite time. When an instrument is payable “on demand” and also at a “definite time,” the “on demand” provision generally governs, meaning it can be presented for payment at any time. However, the specific wording “but no later than December 31, 2024” implies that while demand can be made earlier, the absolute latest date for payment, regardless of demand, is December 31, 2024. This does not violate the definite time requirement because the instrument is still payable at a specific, ascertainable date. The critical element for negotiability is that the payment terms do not introduce uncertainty about *when* payment is due. In this case, the instrument is payable upon demand prior to December 31, 2024, and *must* be paid by that date if not previously demanded. This structure is permissible under UCC § 3-108, which addresses payable on demand or at a definite time. The question hinges on whether this dual provision renders the note non-negotiable. The prevailing interpretation under UCC Article 3 is that an instrument payable on demand with a stated maximum maturity date remains negotiable. The instrument is effectively payable at the earliest of the demand or the stated definite date. Therefore, the note is negotiable because it is payable on demand and also at a definite time, December 31, 2024.

The core issue here revolves around the concept of “holder in due course” (HDC) status and its effect on defenses against payment on a negotiable instrument, specifically in the context of Oklahoma law as governed by UCC Article 3. A party seeking to be an HDC must acquire the instrument (1) for value, (2) in good faith, and (3) without notice of any claim to it or defense against it. In this scenario, the bank received the note after its maturity date. According to UCC § 3-302(a)(2), a holder takes an instrument “without notice that it is overdue or dishonored or that there is an uncured default with respect to payment of another instrument issued as part of the same series.” Acquiring an instrument after its stated maturity date, without more, generally imputes notice of overdue status. Oklahoma law, consistent with the UCC, would therefore preclude the bank from being a holder in due course if it acquired the note after its maturity. If the bank is not an HDC, it takes the instrument subject to all defenses available against the original payee, including the breach of warranty by the seller. Therefore, the bank’s claim against Mr. Abernathy would be subject to the defense that the goods were not as warranted.

Under Oklahoma law, specifically Oklahoma Statutes Title 12A, Section 3-305, a holder in due course (HDC) takes an instrument free from all defenses of any party to the instrument with whom the holder has not dealt, except for certain real defenses. Real defenses are those that can be asserted against any holder, including an HDC. Forgery of a signature is a real defense. Fraud in the factum, also known as fraud in the execution, is another real defense. This occurs when a party is induced to sign an instrument without knowledge or reasonable opportunity to learn its character or essential terms. Conversely, fraud in the inducement, where a party is deceived about the underlying transaction but understands the nature of the instrument, is a personal defense and is cut off by an HDC. In this scenario, the forged signature of Mr. Abernathy renders the note void ab initio, meaning it was invalid from its inception. A void instrument cannot be the basis for a claim, even by an HDC, because there was never a valid instrument to begin with. Therefore, Ms. Gable, as a holder in due course, cannot enforce the note against Mr. Abernathy due to the forgery, which is a real defense. The fact that Ms. Gable paid value, took in good faith, and had no notice of defects is relevant for HDC status but does not overcome a real defense like forgery. The relevant Oklahoma statute is 12A O.S. § 3-305(a)(1)(A), which states that the obligation of a party with respect to a negotiable instrument is subject to a defense of any party that is based on a forgery of that party’s signature.

The core issue revolves around the concept of negotiability and the effect of an indorsement that purports to transfer rights to a portion of a negotiable instrument. Under UCC Article 3, as adopted in Oklahoma, a negotiable instrument must be for a fixed amount of money and payable to order or to bearer. A key requirement for negotiability is that the instrument must be payable to a specific person or entity, or to bearer. When an instrument is indorsed to transfer rights to only a portion of the instrument’s value, it fundamentally alters the nature of the instrument and violates the requirement for payment of the entire sum due. Specifically, UCC § 3-104(a) defines a negotiable instrument, and § 3-110 specifies how an instrument is made payable to order. An indorsement that splits the payment obligation, such as directing payment of half to one party and half to another on the face of the instrument itself, or through a restrictive indorsement that attempts to assign a portion of the rights, prevents the instrument from being payable to a specific person or entity for its entirety. This fragmentation of the obligation means the instrument is no longer payable to the order of a specific payee for the full amount, thus destroying its negotiability. Therefore, any subsequent holder taking such an instrument cannot qualify as a holder in due course because the instrument itself is not negotiable. The scenario describes an indorsement that attempts to divide the payment, which is an invalid form of indorsement for maintaining negotiability. The indorsement, by its nature, does not create a valid assignment of a portion of the instrument’s value in a way that preserves negotiability under Oklahoma law. The UCC requires that the entire instrument be transferred for a holder to acquire rights, and an attempt to split the payment through indorsement renders the instrument non-negotiable.

Under Oklahoma law, specifically UCC Article 3, a holder in due course (HOC) status is crucial for asserting rights against a maker of a negotiable instrument. To achieve HOC status, a holder must take the instrument for value, in good faith, and without notice of any defense or claim against it. The scenario involves a promissory note executed by a rancher in Oklahoma. The note was transferred to a bank. The bank, in this case, took the note for value as it provided a loan against it. The question of good faith and notice is central. If the bank had knowledge of a prior dispute between the rancher and the original payee concerning the quality of livestock for which the note was given, this knowledge would constitute notice of a defense. Such notice would prevent the bank from being a holder in due course. The UCC defines “notice” broadly to include actual knowledge, receipt of a notice, or reason to know from all the facts and circumstances. In Oklahoma, as in other adopting states, the absence of notice is a critical element. If the bank was aware of the underlying dispute regarding the livestock, it cannot claim HOC status and is therefore subject to any defenses the rancher might have against the original payee, such as breach of warranty or failure of consideration. The UCC § 3-302(a) outlines the requirements for HOC status. Oklahoma’s adoption of the UCC means these principles apply. The core issue is whether the bank’s awareness of the livestock dispute disqualifies it from HOC status. If the bank knew or had reason to know of the rancher’s defense (the livestock quality issue) at the time it acquired the note, it is not a holder in due course. This means the bank takes the note subject to the rancher’s defenses.

The scenario involves a promissory note that is payable to an identifiable person but lacks a specific payee name. Under Oklahoma’s Uniform Commercial Code (UCC) Article 3, specifically focusing on negotiable instruments, the issue is whether such an instrument can be considered payable to order. An instrument is payable to order if it is payable to the order of an identified person or to a transferee of an identified person. If an instrument is payable to an identified person, but not to the person’s order, it is payable to that person and may be endorsed by that person. However, if the instrument is payable to an identifiable person but the name is blank or omitted, the UCC provides guidance. Oklahoma UCC § 3-115 addresses incomplete instruments. If an instrument contains blanks for the name of the payee, it is not payable to order unless the blanks are filled in. In this case, the note states “Pay to the order of ______”, and it is delivered to an identifiable person, Ms. Anya Sharma. For the instrument to be order paper, the payee must be identified. Since the payee line is blank, it is not payable to order. Instead, it is considered payable to cash if it is bearer paper, or it is incomplete and cannot be negotiated as order paper until the payee is identified. However, the question states it is delivered to an identifiable person. Oklahoma UCC § 3-110(b) states that an instrument is payable to bearer if it is payable to “cash” or to “a specified person or bearer” or to the order of an unspecified person. The note here is not payable to bearer by its terms; it explicitly states “Pay to the order of ______”. When an instrument is payable to an identified person, but the payee is not identified (e.g., a blank), it is not payable to order. The instrument is incomplete until the payee’s name is filled in. Until then, it cannot be negotiated as order paper. The UCC presumes that if the payee line is blank but the instrument is delivered to an identified person, that person is the intended payee. However, this does not automatically convert it to order paper. Oklahoma UCC § 3-115(a) states that a signature on an incomplete instrument for the purpose of negotiation may be enforced as though it had been completed if the instrument is completed in accordance with authority given. Without evidence of authority to fill in the blank as “order of Anya Sharma,” the instrument is not order paper. The key is that “order” requires an identified payee. Since the payee line is blank, it is not payable to order. It is an incomplete instrument. The question implies it is delivered to Ms. Sharma. Oklahoma UCC § 3-110(c)(1) states that an instrument is payable to an identified person if the instrument is payable to that person. However, for order paper, it must be payable “to the order of an identified person.” A blank payee line, even with delivery to an identified person, does not fulfill the “order of” requirement for order paper until the blank is properly completed. Therefore, it is not payable to order.

The scenario involves a promissory note that contains an acceleration clause. An acceleration clause permits the holder of the note to declare the entire unpaid balance immediately due and payable upon the occurrence of a specified event, such as a default. In this case, the note states that if the maker fails to make any monthly payment on or before the tenth day of the month, the entire principal balance, with accrued interest, becomes immediately due. This is a common feature in commercial paper designed to protect the lender from the increased risk associated with a borrower’s default. Oklahoma law, as codified in UCC Article 3, generally permits such clauses, provided they do not render the instrument non-negotiable by making the time of payment uncertain. An acceleration clause based on a specific event like non-payment does not destroy negotiability because the time of payment, while accelerated, is still determinable. Therefore, upon the maker’s failure to pay the June installment by June 10th, the holder is entitled to demand the full remaining principal and accrued interest. The question asks about the holder’s immediate rights. The holder can demand the entire unpaid principal balance plus accrued interest.

The scenario involves a negotiable instrument that is altered after issuance. The question asks about the rights of a holder in due course (HDC) against the drawer of a draft that has been materially altered. Under UCC Article 3, specifically Oklahoma Statute Title 12A, Section 3-407, a holder in due course can enforce an instrument that has been materially altered according to its tenor at the time of the alteration. However, if the instrument is materially altered by a holder, and the alteration is both fraudulent and material, the drawer is discharged from liability on the instrument. In this case, the alteration of the payee’s name from “Elara Vance” to “Elara Vance or Orion Industries” is a material alteration because it changes the contract of the obligor. The alteration was made by the payee, who is not a holder in due course. The question states the payee altered the draft. Therefore, the payee’s alteration does not affect the rights of a holder in due course. A holder in due course who took the draft after the alteration would be able to enforce it against the drawer according to its tenor at the time of the alteration. The tenor at the time of the alteration was the amount payable to “Elara Vance.” The subsequent holder, Ms. Anya Sharma, is presented as a holder in due course. Therefore, Ms. Sharma can enforce the draft against Mr. Silas Croft (the drawer) for the amount originally payable to Elara Vance, which was $7,500. The alteration was made by the payee, not by Ms. Sharma. Therefore, Ms. Sharma’s rights as a holder in due course are preserved against the drawer, and she can enforce the instrument according to its original tenor. The key principle is that an alteration by a holder that is not a holder in due course can discharge parties who are not parties to the alteration, but a holder in due course can enforce the instrument as it was when they acquired it, or according to its tenor at the time of the alteration if the alteration was made by a party to the instrument. Here, the payee altered it, and the HDC took it after the alteration. The HDC can enforce it according to its tenor at the time of the alteration.

The core issue here revolves around the enforceability of a promissory note that contains a statement of consideration beyond the mere promise to pay. Under Oklahoma’s Uniform Commercial Code (UCC) Article 3, a negotiable instrument must contain an unconditional promise or order to pay a fixed amount of money, payable on demand or at a definite time, and payable to order or to bearer. While a statement of consideration is generally not required for negotiability, its inclusion can sometimes raise questions about whether it renders the promise conditional. In this scenario, the note states it is given “in consideration of the delivery of a vintage 1957 Chevrolet Bel Air.” This phrase, while descriptive of the exchange, does not make the promise to pay contingent upon the actual delivery or satisfactory condition of the car. The UCC, specifically \(§ 3-104(a)\) in Oklahoma, defines a negotiable instrument as a promise to pay that is not a “promise to do any other thing besides paying money.” The inclusion of the consideration clause does not obligate the maker to do anything other than pay the stated sum. It is a recital of the reason for the promise, not a condition precedent to payment. Therefore, the note is still a negotiable instrument. The fact that the car might have been a lemon or not delivered at all is a separate issue of contract law concerning the underlying transaction, but it does not destroy the negotiability of the instrument itself, nor does it necessarily preclude enforcement by a holder in due course. A holder in due course takes the instrument free from most defenses, including defenses arising from the underlying contract. The question asks about the negotiability and enforceability by a holder in due course, and the statement of consideration, as phrased, does not render the promise conditional.

The core issue here revolves around the concept of a holder in due course (HDC) and the defenses available against such a holder. Under Oklahoma law, which largely follows UCC Article 3, a negotiable instrument is taken by a holder in due course if it is taken (1) for value, (2) in good faith, and (3) without notice that it is overdue or has been dishonored or that there is a defense or claim against it. The scenario presents a promissory note for \$5,000. The maker, Mr. Abernathy, claims a breach of warranty by the payee, Ms. Bellweather, regarding the quality of goods for which the note was given. This constitutes a personal defense. A holder in due course takes the instrument free from all claims to it on the part of the obligor and all defenses of any party that are not real defenses. Personal defenses, such as breach of contract or warranty, are generally cut off when the instrument is negotiated to an HDC. The question is whether Mr. Finch qualifies as an HDC. Mr. Finch purchased the note for \$4,500, which is “value” as it is less than the face amount but still constitutes value. He purchased it from Ms. Bellweather, the payee. The critical element is notice. The facts state Mr. Finch had no knowledge of any defenses or claims against the note. Therefore, he took the note in good faith and without notice. Accordingly, Mr. Finch is a holder in due course. As an HDC, Mr. Finch is subject only to real defenses, not personal defenses like breach of warranty. Therefore, Mr. Abernathy cannot assert the breach of warranty defense against Mr. Finch. The amount Mr. Finch paid, \$4,500, is relevant to establishing he took for value, but it does not alter the fact that he is an HDC and can enforce the full \$5,000 face amount, subject to any real defenses which are not present here. The law presumes a holder is an HDC unless the obligor proves otherwise. Here, Mr. Abernathy’s claim is a personal defense.

The scenario involves a negotiable instrument, a promissory note, executed by Ms. Albright. The note was initially given to Ms. Albright’s neighbor in exchange for a promise of future landscaping services. These services were never provided, constituting a failure of consideration, which is a personal defense to payment on the note. The note was subsequently negotiated to Mr. Sterling, who then negotiated it to Mr. Vance. The facts indicate that Mr. Vance acquired the note for value, in good faith, and without notice of any claims or defenses against it. Under Oklahoma’s Uniform Commercial Code (UCC) Article 3, Mr. Vance qualifies as a holder in due course (HDC). A holder in due course takes the instrument free from all defenses of any party to the instrument with respect to that party’s own engagement on the instrument, except for real defenses. Personal defenses, such as failure of consideration, breach of contract, or lack of consideration, are cut off by an HDC. Real defenses, which include issues like fraud in the execution, forgery, material alteration, infancy, duress, illegality, and discharge in insolvency proceedings, can be asserted against an HDC. Since Ms. Albright’s defense is failure of consideration, a personal defense, she cannot assert it against Mr. Vance, who is a holder in due course. The question asks what defense Ms. Albright can assert. Given that Mr. Vance is an HDC and the only defense described is a personal one, Ms. Albright cannot assert this personal defense against Mr. Vance. The question is testing the understanding of the distinction between real and personal defenses and their enforceability against a holder in due course.

The core concept here relates to the holder in due course (HDC) status and the defenses available against payment. A negotiable instrument is taken by a holder in due course if it is taken for value, in good faith, and without notice of any claim or defense against it. Oklahoma law, following the Uniform Commercial Code (UCC) Article 3, categorizes defenses into real defenses and personal defenses. Real defenses are those that can be asserted against any holder, including an HDC, while personal defenses are generally not effective against an HDC. Forgery is a real defense because it fundamentally vitiates the instrument’s validity from its inception. A forged signature is wholly inoperative, meaning the purported drawer or maker is not bound by it. Therefore, even if a holder acquired the instrument for value and in good faith, they cannot enforce it against the party whose signature was forged. In this scenario, the promissory note bears a forged signature of the maker, Elara Vance. Consequently, Elara Vance has a real defense against payment. Any subsequent holder, regardless of their HDC status, cannot overcome this defense. The question asks about the enforceability of the note against Elara Vance. Since her signature is forged, she is not bound by the note, and it is not enforceable against her.

The scenario involves a promissory note that contains an acceleration clause. An acceleration clause allows the holder of the note to declare the entire unpaid balance immediately due and payable upon the occurrence of a specified event, such as a default. In this case, the note is payable on demand, which means the holder can demand payment at any time. The Uniform Commercial Code (UCC) as adopted in Oklahoma, specifically Article 3, governs negotiable instruments. Under UCC § 3-108(a), an instrument is payable on demand if it states that it is payable “on demand” or “at sight” or otherwise indicates that it is payable at the will of the holder. The presence of an acceleration clause does not affect the negotiability of the instrument, as it relates to the time of payment, not the certainty of payment itself. Therefore, the holder of the note, having the right to demand payment at any time due to the “on demand” nature of the instrument, can enforce the note for the full unpaid principal and any accrued interest. The acceleration clause simply formalizes the holder’s right to demand immediate payment upon a default or, in this case, upon the exercise of the demand provision. The fact that the note is secured by collateral in Oklahoma is relevant to enforcement procedures but does not alter the fundamental negotiability or the holder’s right to demand payment under the terms of the note itself. The question is about the holder’s right to immediate payment based on the note’s terms.

The scenario involves a promissory note that is transferred by endorsement and delivery. The critical issue is whether the transferee, Prairie Land Bank, qualifies as a holder in due course (HDC) under Oklahoma’s Uniform Commercial Code (UCC) Article 3, specifically focusing on the requirements of good faith and notice of claims or defenses. Prairie Land Bank received the note from Rancher’s Supply, which had obtained it from Cowboy Creations. Cowboy Creations, the original payee, had a claim against Rancher’s Supply due to a breach of contract. For Prairie Land Bank to be an HDC, it must take the instrument for value, in good faith, and without notice that it is overdue or has been dishonored or of any defense or claim to it on the part of any person. The question states that Prairie Land Bank had “actual knowledge” of a dispute between Rancher’s Supply and Cowboy Creations regarding the underlying transaction. This actual knowledge constitutes notice of a claim to the instrument. Under UCC § 3-302, a holder cannot be an HDC if the holder has notice of a claim or defense. Therefore, Prairie Land Bank, possessing actual knowledge of the dispute, cannot satisfy the requirements to be a holder in due course. This means it takes the note subject to the defenses and claims that Cowboy Creations could assert against Rancher’s Supply. The UCC in Oklahoma, as elsewhere, defines “notice” broadly to include actual knowledge. The concept of good faith, while also required, is superseded by the direct notice of a claim. The question tests the understanding that actual knowledge of a dispute directly prevents holder in due course status, regardless of other factors like taking for value or the absence of other types of notice.

The scenario involves a promissory note that is not payable to order or to bearer, meaning it is not a negotiable instrument under UCC Article 3. Specifically, the note states “Pay to the order of [Payee Name]” but then includes a restrictive endorsement, “Pay to Alice, and only Alice.” This restrictive endorsement effectively negates the initial “order” language, transforming the instrument into a mere promise to pay a specific person, Alice, without the ability to negotiate it further in the manner of a negotiable instrument. Under Oklahoma law, as codified by UCC Article 3, an instrument must be payable “to order” or “to bearer” to be negotiable. When an instrument is made payable to a specific person and contains language that limits further transferability to that specific person, it ceases to be negotiable. Therefore, Alice cannot transfer the note by endorsement to a third party, and any purported endorsement by her would only transfer the rights of a holder of a non-negotiable instrument, meaning she can transfer only what she possesses, which is the right to payment directly from the maker, and not the rights of a holder in due course.

In Oklahoma, under UCC Article 3, a person entitled to enforce an instrument is the holder of the instrument or a non-holder in possession of the instrument who has the rights of a holder. This is often referred to as having “standing” to sue on the instrument. For a holder in due course (HDC), the instrument must be negotiable, held by a holder, and taken in good faith, for value, and without notice of any defense or claim. However, the question focuses on the ability to enforce, not necessarily HDC status. When an instrument is transferred by negotiation, the transferee becomes a holder. If the instrument is payable to bearer, possession alone makes the possessor a holder. If it is payable to a specific person, endorsement by that person is required for negotiation. A forged endorsement breaks the chain of title, meaning a subsequent possessor cannot become a holder through that forged endorsement. Therefore, if a check is stolen and the payee’s endorsement is forged, the thief or anyone to whom they transfer it cannot be a holder and thus cannot enforce the instrument against the drawer or any prior party who has a defense. The original payee, whose endorsement was forged, retains their rights. Oklahoma law, consistent with the UCC, protects parties from liability on instruments where their obligations are based on forged endorsements.

The scenario involves a promissory note that is initially payable to “bearer.” Under Oklahoma’s Uniform Commercial Code (UCC) Article 3, specifically Section 3-109, an instrument is payable to bearer if it states that it is payable to bearer or to a specific person or order, or to bearer. Furthermore, Section 3-201 addresses the transfer of an instrument and the rights acquired by a transferee. A transfer of possession of an instrument by a person other than the issuer to a person entitled to enforce the instrument constitutes a negotiation if the instrument is payable to bearer. When an instrument is payable to bearer, it can be negotiated by mere delivery. No endorsement is required. Therefore, when the note payable to “bearer” is delivered by Ms. Albright to Mr. Chen, the negotiation is complete, and Mr. Chen becomes the holder entitled to enforce the instrument. The subsequent endorsement by Ms. Albright is legally superfluous for the negotiation of a bearer instrument.

Under Oklahoma law, as governed by UCC Article 3, a holder in due course (HOC) takes an instrument free from all defenses of any party to the instrument with whom the holder has not dealt, except for real defenses. Real defenses are a limited set of defenses that can be asserted even against a holder in due course. These defenses are generally those that make the instrument void or voidable from its inception, or relate to the fundamental nature of the instrument or the transaction. Examples include infancy, duress that nullifies assent, fraud that nullifies assent, illegality of a type that nullifies assent, and discharge in insolvency proceedings. Fictitious payee situations, where a person making the instrument intended the named payee to have no interest in the instrument, are generally treated as if the instrument were payable to bearer, meaning a holder in due course would take it free from claims of the drawer. In this scenario, Ms. Albright’s negotiation of the check to Mr. Barlow, who then negotiated it to Ms. Chen, establishes a chain of negotiation. Ms. Chen, assuming she meets the requirements of a holder in due course (taking for value, in good faith, and without notice of any claim or defense), would be subject to only real defenses. The defense of fraud in the inducement, where a party is induced to enter into a transaction by misrepresentation but still assents to the transaction itself, is not a real defense and is cut off by a holder in due course. Therefore, Ms. Chen would be able to enforce the instrument against Ms. Albright despite the fraud in the inducement.

The core concept here revolves around the liability of a person who endorses a negotiable instrument that is later dishonored. Under Oklahoma’s Uniform Commercial Code (UCC) Article 3, specifically focusing on the rights and liabilities of parties to a negotiable instrument, an endorser of a draft or note undertakes a conditional obligation. This obligation is to pay the instrument according to its tenor at the time of endorsement if it is dishonored, provided that the conditions for charging the endorser are met. These conditions typically include presentment of the instrument for payment or acceptance, and if the instrument is dishonored, notice of dishonor must be given to the endorser within a specified time. The UCC also permits waiver of these conditions, either explicitly or by conduct. In this scenario, the waiver of presentment and notice of dishonor by Ms. Gable directly impacts her liability. By waiving these requirements, she essentially agrees to be bound by the instrument’s terms without the usual procedural safeguards afforded to endorsers. Therefore, when the bank dishonors the check due to insufficient funds, and Ms. Gable has previously waived presentment and notice of dishonor, she remains liable to the holder for the amount of the instrument. The UCC § 3-415 in Oklahoma addresses the liability of an endorser, and the waiver of presentment and notice of dishonor, as outlined in § 3-504, discharges the drawer and endorsers from the obligation to receive notice of dishonor. Her liability is not conditional upon the bank’s solvency or the drawer’s ability to pay, but rather on the fact of dishonor and her prior waiver.

The scenario involves a negotiable instrument that was materially altered after its issuance. Under Oklahoma’s version of UCC Article 3, specifically focusing on § 3-407, a holder in due course (HDC) can enforce the instrument according to its original tenor if the alteration was fraudulent and material. However, if the holder is not an HDC, they can only enforce the instrument according to its terms as they were before the alteration. In this case, the instrument was originally payable to “Cash” and was later altered to be payable to “Alex Adams.” This is a material alteration because it changes the payee, affecting the obligation of the parties. Assuming the bank, as the entity seeking to enforce, is not an HDC in this context (e.g., it took the instrument with notice of the alteration or defect), it cannot enforce the instrument as altered. The question asks what the bank can enforce. Since the bank is not presented as an HDC, and the alteration is material and fraudulent (changing the payee), the bank can only enforce the instrument as it was originally written, which was payable to “Cash.” Therefore, the bank can enforce the instrument as originally issued, meaning it can enforce it as if it were payable to “Cash.”

The core issue here revolves around the negotiability of an instrument that contains a clause allowing for acceleration of the due date. Under UCC Article 3, as adopted in Oklahoma, an instrument is negotiable if it contains an unconditional promise or order to pay a fixed amount of money and is payable on demand or at a definite time. A clause that permits acceleration of the due date does not render the promise conditional, provided that the acceleration is based on events that are certain to occur or are within the control of the obligor. The UCC explicitly states that the time of payment is not rendered uncertain merely by a provision for acceleration. Therefore, a note that states “due on demand or, if earlier, upon the occurrence of any default under the related security agreement” remains negotiable. The default under a security agreement, while contingent on the borrower’s actions, is considered a sufficiently definite event for the purpose of negotiability, as it is tied to specific contractual obligations. The negotiability is not destroyed because the acceleration clause relates to a breach of a separate agreement, as long as the promise to pay the fixed amount remains otherwise unconditional.

The core issue here is whether a subsequent holder in due course (HDC) can enforce an instrument that was originally obtained by fraud in the inducement. Fraud in the inducement occurs when a party is tricked into signing a negotiable instrument by misrepresentation of a material fact, but they understand the nature of the instrument they are signing. In contrast, fraud in the factum occurs when a party is deceived about the very nature of the instrument itself, making it void. Under Oklahoma’s version of UCC Article 3, fraud in the inducement is generally a personal defense, meaning it can be asserted against a party who is not an HDC. However, an HDC takes an instrument free from all defenses except for those specifically enumerated as real defenses. Fraud in the inducement is not a real defense. Therefore, if the bank, as the subsequent holder, can establish that it is a holder in due course, it will take the note free from the maker’s defense of fraud in the inducement. To be an HDC, the bank must have taken the note for value, in good faith, and without notice that it was overdue or had been dishonored or that it contained any defense or claim of any kind on the part of any person. Assuming the bank meets these criteria, it can enforce the note against Mr. Abernathy, even though his signature was procured by fraud in the inducement. The explanation does not involve any calculations.

The scenario involves a promissory note that contains an acceleration clause and a statement of consideration. Under Oklahoma law, specifically UCC Article 3, an instrument is negotiable if it contains an unconditional promise to pay a fixed amount of money, payable on demand or at a definite time, and payable to order or to bearer. An acceleration clause, which allows the holder to demand payment of the entire amount due prior to the stated maturity date upon the occurrence of a specified event, does not destroy negotiability. This is because the payment due date, while subject to acceleration, is still considered a “definite time” for purposes of negotiability. The clause specifying “for value received” is a statement of consideration and does not affect the negotiability of the instrument. Therefore, the note remains a negotiable instrument. The core principle tested here is the impact of acceleration clauses and statements of consideration on the negotiability of a promissory note under UCC Article 3, as adopted in Oklahoma. Oklahoma’s adoption of UCC Article 3, particularly § 3-104, defines what constitutes a negotiable instrument. An acceleration clause is explicitly permitted as it does not render the promise to pay conditional in a way that defeats negotiability, as the time of payment is still determinable. Similarly, a recital of consideration does not make the promise conditional.

The core concept tested here is the holder in due course (HDC) status and its implications for defenses against payment on a negotiable instrument. Under Oklahoma’s Uniform Commercial Code (UCC) Article 3, a holder in due course takes an instrument free from all defenses of a party to the instrument with whom the holder has not dealt, except for real defenses. Real defenses, which are available against any holder, including an HDC, include fraud in the execution (or “real fraud”), forgery, material alteration, discharge in insolvency proceedings, and infancy or other incapacity. Personal defenses, which are generally cut off by an HDC, include breach of contract, failure of consideration, fraud in the inducement, and illegality. In this scenario, the “fraudulent misrepresentation of the nature of the document” constitutes fraud in the execution, a real defense. Therefore, even though Ms. Gable might otherwise qualify as a holder in due course by taking the note for value, in good faith, and without notice of any claim or defense, she cannot enforce the note against Mr. Chen due to this real defense. The UCC specifically enumerates these real defenses that can be asserted against an HDC. The fact that Mr. Chen was presented with a document he believed to be a simple receipt, but which was actually a promissory note, directly aligns with the definition of fraud in the execution.

The core issue here is whether the endorsement on the back of the promissory note, which reads “Pay to the order of Beatrice, but only if she completes the landscaping project by October 1st,” creates a negotiable instrument under UCC Article 3, as adopted in Oklahoma. A key requirement for negotiability is that the instrument must contain an unconditional promise or order to pay a fixed amount of money. The phrase “but only if she completes the landscaping project by October 1st” introduces a condition precedent to payment. This condition makes the promise to pay contingent upon the completion of a specific event, thereby rendering the promise conditional. According to Oklahoma Statute Title 12A, Section 3-104(a), a negotiable instrument must be an unconditional promise or order. A promise or order is conditional if it states an obligation to do any act in addition to the payment of money. The condition of completing the landscaping project is an additional act beyond the payment of money. Therefore, the instrument is not negotiable because the promise to pay is conditional. The UCC’s definition of negotiability is strict, and any deviation that makes the payment dependent on an event or an action other than the passage of time or the payment of money itself will disqualify the instrument. Oklahoma follows these general principles of UCC Article 3.

In Oklahoma, under UCC Article 3, a negotiable instrument is an unconditional promise or order to pay a fixed amount of money, payable on demand or at a definite time, payable to bearer or to order, and not stating any other undertaking or instruction by the person promising or ordering payment to do any act in addition to the payment of money. The question involves a promissory note that includes a clause for attorney’s fees and collection costs upon default. Such a clause, while common, can impact the negotiability of the instrument. Specifically, UCC § 3-104(a)(3) states that a promise or order is conditional if it states an obligation to do any act in addition to the payment of money. However, UCC § 3-104(a)(3)(iv) provides an exception: a promise or order is not conditional if it is an undertaking to pay attorney’s fees or collection costs upon default. Therefore, the inclusion of a provision for attorney’s fees and collection costs upon default does not render the promissory note non-negotiable in Oklahoma, as this is an allowed exception to the general rule against additional undertakings. The note, otherwise meeting all other requirements of negotiability, remains a negotiable instrument.

The core issue here revolves around the concept of a holder in due course (HDC) and the defenses available against payment on a negotiable instrument. Under Oklahoma law, which largely follows UCC Article 3, a person who takes an instrument for value, in good faith, and without notice of any claim or defense against it is an HDC. An HDC takes the instrument free from most personal defenses that the maker might have against the original payee. However, certain real defenses are still available against an HDC. These real defenses include fraud that induces the obligor to make the instrument with neither knowledge nor reasonable opportunity to obtain knowledge of its character or its essential terms, infancy, duress, illegality of the transaction, or discharge in insolvency proceedings. In this scenario, the promissory note was made by Elara to a contractor for services Elara believed were legitimate. However, the contractor misrepresented the nature of the services, leading Elara to sign the note under a fraudulent pretense about the actual work being performed. This constitutes fraud in the factum, which is a real defense. When Elara discovered the misrepresentation, she had grounds to refuse payment. The note was then transferred to Finn. For Finn to be an HDC, he must have taken the note for value, in good faith, and without notice of Elara’s defense. While Finn might have given value, the critical element is notice. The fact that Finn is the contractor’s cousin and the transaction occurred shortly after Elara expressed concerns about the services raises a strong inference that Finn had knowledge or reason to know of the underlying dispute and the potential defense. If Finn had actual knowledge of the fraud, or if the circumstances were so suspicious that his failure to inquire amounted to bad faith, he would not qualify as an HDC. Therefore, Elara can assert the real defense of fraud against Finn. The calculation to determine the outcome is conceptual, not numerical. The question is about whether Finn, as a potential HDC, can enforce the note against Elara despite Elara’s defense of fraud. The legal principle is that a real defense, such as fraud in the factum, is valid against any holder, including an HDC. The critical determination is whether Finn qualifies as an HDC. If Finn had knowledge of the fraud or the circumstances surrounding the transfer were such that he acted in bad faith by not inquiring further, he would not be an HDC. Given the familial relationship and the timing, it is highly probable that Finn had notice, or his lack of inquiry constituted bad faith. Thus, Elara’s real defense of fraud is available against Finn.