The core issue here is whether a subsequent holder of the note can enforce it against the maker, considering the original payee’s endorsement. Under North Dakota’s Uniform Commercial Code (UCC) Article 3, specifically regarding negotiable instruments, a holder in due course (HDC) takes an instrument free from most defenses available to the maker against the original payee. To be an HDC, a holder must take the instrument for value, in good faith, and without notice that it is overdue or has been dishonored or that there is a defense or claim against it. In this scenario, the note is payable to “order” of “Prairie Sky Holdings.” The initial endorsement by Prairie Sky Holdings to “Agri-Growth Solutions” is a special endorsement, making Agri-Growth Solutions the holder. When Agri-Growth Solutions then endorses the note in blank by simply signing its name on the back, it converts the instrument into a bearer instrument. Any subsequent holder in possession of a bearer instrument is deemed to be a holder. The critical question is whether the subsequent holder, Mr. Abernathy, qualifies as a holder in due course. The facts state that Mr. Abernathy purchased the note for substantial value and had no knowledge of the dispute between the maker and the original payee, nor any knowledge of the underlying transaction’s alleged fraud. He acquired the note in good faith. Therefore, Mr. Abernathy meets the criteria of a holder in due course. As a holder in due course, Mr. Abernathy takes the note free from personal defenses that the maker might have against the original payee, such as fraud in the inducement. However, real defenses, like forgery or material alteration, would still be available. Since the maker’s defense is fraud in the inducement, which is a personal defense, it is cut off by Mr. Abernathy’s status as a holder in due course. Thus, Mr. Abernathy can enforce the note against the maker. The value paid by Mr. Abernathy was $45,000 for a $50,000 note, which is considered substantial value, and there is no indication he had notice of any defenses or claims.

The core issue here revolves around the concept of a holder in due course (HDC) and the defenses available against such a holder. Under North Dakota’s Uniform Commercial Code (UCC) Article 3, a negotiable instrument must meet specific criteria to be considered such, including being payable on demand or at a definite time, and being payable to order or to bearer. If an instrument is not negotiable, then any holder, regardless of whether they took it for value and in good faith, takes it subject to all defenses and claims that would be available in a simple contract action. In this scenario, the promissory note states it is payable “upon completion of the irrigation system construction.” This contingency makes the payment date uncertain and dependent on an external event, thus failing the “definite time” requirement of negotiability under UCC § 3-104(a)(2). Consequently, the note is not a negotiable instrument. When the note is not negotiable, the transferee, Mr. Abernathy, cannot achieve the status of a holder in due course. Therefore, he takes the note subject to all defenses that the maker, Ms. Peterson, would have against the original payee, Mr. Gable. Ms. Peterson’s defense of failure of consideration, stemming from Mr. Gable’s breach of contract in not completing the irrigation system, is a real defense that is generally available against any holder, including a holder in due course, and certainly against a holder who is not an HDC. Because the note is non-negotiable, Mr. Abernathy is subject to Ms. Peterson’s defense of failure of consideration.

The scenario involves a negotiable instrument that is payable to bearer. Under North Dakota Century Code § 41-03-110 (UCC § 3-110), an instrument is payable to bearer if it states that it is payable to bearer or to the order of bearer, or if it does not identify any payee, or if it identifies a payee that is not a legal entity, or if it identifies a payee that is not a legal entity or an individual, or if the only indication of the payee is a serial number or other identifying information, or if it states that it is payable to cash or otherwise indicates that it is not payable to an identified person. In this case, the promissory note explicitly states “Pay to the order of Bearer.” This unconditional language clearly designates the instrument as payable to bearer. Therefore, possession of the instrument by a holder, coupled with the bearer status, is sufficient to establish the holder’s right to enforce it, irrespective of any endorsement. The fact that it was originally issued to a specific individual does not alter its bearer status once that designation is made on the instrument itself. The core principle here is that the instrument’s terms, as written, dictate its negotiability and enforceability. The question tests the understanding of how the “payable to bearer” designation on an instrument, as defined by UCC Article 3 and adopted in North Dakota, dictates its transfer and enforcement rights.

The core issue revolves around the negotiability of a document that includes a promise to pay a fixed sum of money but also introduces a condition precedent to payment. Under North Dakota’s Uniform Commercial Code (UCC) Article 3, specifically Section 3-104, a negotiable instrument must contain an unconditional promise or order to pay a fixed amount of money. The presence of a condition that must be met before payment is due renders the promise conditional, thereby destroying its negotiability. In this scenario, the obligation to pay the $5,000 is explicitly tied to the successful completion of the construction project. If the project is not completed, the payment is not due. This makes the promise conditional. Consequently, the instrument cannot be considered a negotiable instrument under North Dakota law because it fails the “unconditional promise” requirement. Instruments that are not negotiable are treated as simple contracts and cannot be transferred by endorsement and delivery to confer holder-in-due-course status on subsequent transferees. The UCC aims to facilitate the free circulation of commercial paper, and conditions that create uncertainty about whether payment will ever be made undermine this purpose. Therefore, the instrument’s character as a non-negotiable contract is established by this condition precedent.

The core issue here revolves around the concept of a holder in due course (HDC) and the defenses available against such a holder. Under North Dakota’s Uniform Commercial Code (UCC) Article 3, a negotiable instrument must meet specific criteria to qualify. For a promise or order to be negotiable, it must be in writing, signed by the maker or drawer, 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. The instrument in question is a promissory note. The note is for a fixed amount of money, signed by the maker, and payable at a definite time. The critical element is the “unconditional” nature of the promise. The phrase “subject to the terms and conditions of the separate written agreement dated January 15, 2023, between the maker and the payee” renders the promise conditional. This reference to another agreement, which could potentially alter the payment obligation or introduce contingencies, means the promise is not unconditional as required by UCC § 3-104(a)(1). Therefore, the instrument is not a negotiable instrument. If the instrument is not negotiable, then the transferee cannot be a holder in due course, regardless of whether they took it for value, in good faith, and without notice of any claim or defense. A holder in due course takes an instrument free from most defenses, but this protection is only available for negotiable instruments. Since the note is not negotiable due to the conditional promise, any transferee takes it subject to all defenses available to the maker, including the defense that the instrument is not a negotiable instrument. Consequently, the maker can assert any defenses they have against the original payee against the transferee.

The core issue here revolves around the enforceability of a promissory note that has been altered after its issuance, specifically concerning the amount payable. Under North Dakota’s Uniform Commercial Code (UCC) Article 3, particularly concerning negotiable instruments, a material alteration of a negotiable instrument can affect its enforceability. Section 3-407 of the UCC addresses the effect of an alteration. If an instrument is issued with a blank that is then filled in, or if it is altered, the holder in due course (HDC) may enforce it according to its original tenor. However, if the alteration is fraudulent and material, a party whose obligation was altered may be discharged from that obligation. In this scenario, the promissory note was originally for $5,000. The alteration to $15,000 is both material (affecting the amount payable) and, given the context of a fraudulent change, likely intended to defraud. For a party to be discharged from an altered instrument, they must demonstrate that the alteration was fraudulent and material. A holder in due course, however, can enforce the instrument as originally written. Here, the question implies that Ms. Gable is attempting to collect on the note. If she is a holder in due course, she can enforce the note for the original amount of $5,000, despite the fraudulent alteration. If she is not an HDC, her ability to enforce the altered note is more complex, but the original tenor is still a key factor. North Dakota follows the UCC provisions. The most accurate legal position is that the original maker is bound by the original terms of the note, and a subsequent holder in due course can enforce it as originally written. The question tests the understanding of how material alterations affect enforceability and the rights of a holder in due course under North Dakota UCC Article 3.

The scenario involves a promissory note payable to a specific individual, making it order paper. The indorsement by “Brenda’s Bagel Emporium” without further specification converts it to bearer paper. Subsequently, the physical delivery of the note to Silas, who is not an indorsee and has no right to enforce it, constitutes a negotiation by delivery. Under North Dakota Century Code (NDCC) § 41-03-204 (UCC § 3-204), a negotiation by delivery of an order instrument that has been specially indorsed, without further indorsement, requires the instrument to be indorsed by the last holder. Since the note was payable to “order” and indorsed in blank by Brenda’s Bagel Emporium, it became bearer paper. However, the subsequent physical delivery to Silas without any indorsement by Brenda’s Bagel Emporium means that the transfer to Silas was not a negotiation that vested him with the right to enforce the instrument as a holder in due course or otherwise. To properly negotiate bearer paper, physical delivery is sufficient. But, if the instrument was order paper and the last indorsement was special, it would require an indorsement to complete the negotiation. In this case, the indorsement by Brenda’s Bagel Emporium was not special (i.e., it did not specify a payee). Therefore, it became bearer paper. The physical delivery to Silas is sufficient for negotiation of bearer paper. Thus, Silas becomes a holder. The explanation of why Silas is a holder hinges on the instrument becoming bearer paper after the indorsement by Brenda’s Bagel Emporium, which was not a special indorsement. Delivery of bearer paper constitutes negotiation. Therefore, Silas is a holder.

The core issue here revolves around the concept of “negotiability” and whether a purported instrument qualifies as a negotiable instrument under UCC Article 3, as adopted in North Dakota. For an instrument to be negotiable, it must meet several strict requirements, including being 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. In this scenario, the inclusion of the phrase “subject to the terms and conditions of the master agreement dated October 15, 2023” renders the promise conditional. UCC § 3-104(a)(1) mandates that a negotiable instrument must contain an unconditional promise or order. A promise or order is conditional if it states that it is subject to or governed by another writing. While reference to another writing for information about rights and obligations is permissible, conditioning payment on compliance with or the terms of that other writing destroys negotiability. Therefore, the note issued by Mr. Henderson to Ms. Gable, referencing the master agreement for its terms, is not a negotiable instrument. This means it cannot be transferred by endorsement and delivery in a manner that would allow a holder in due course to take it free of defenses that the maker might have against the original payee. The Uniform Commercial Code, specifically Article 3 as enacted in North Dakota, is designed to facilitate commerce by providing certainty and predictability in the transfer of certain types of instruments. When an instrument’s terms are tied to another agreement in a way that makes payment contingent upon that agreement’s provisions, it fails to meet the stringent requirements of negotiability. This distinction is crucial for determining the rights and liabilities of parties involved in the transfer and enforcement of such instruments.

Under North Dakota’s Uniform Commercial Code (UCC) Article 3, a negotiable instrument must contain certain essential elements to be considered such. One crucial element is that the instrument must be payable on demand or at a definite time. For an instrument to be payable at a definite time, any condition precedent to payment must be capable of being determined with certainty. If payment is contingent upon an event that is not certain to occur, or the timing of which is not ascertainable, the instrument may fail to be negotiable. In the scenario presented, the payment of the promissory note is explicitly tied to the successful completion of the Fargo Civic Center renovation project. The completion of a construction project, while expected, is not an event that is guaranteed to occur, nor is its exact completion date always definitively knowable at the time the instrument is drafted, as unforeseen delays are common in such undertakings. Therefore, the condition precedent to payment is not certain. This uncertainty regarding the timing and even the certainty of the payment event prevents the instrument from being payable at a definite time, thus rendering it non-negotiable under UCC Article 3 as adopted in North Dakota. The UCC prioritizes predictability and certainty in the flow of commerce, and instruments with uncertain payment conditions do not meet this standard.

The core issue here is whether the instrument qualifies as a negotiable instrument under North Dakota’s Uniform Commercial Code (UCC) Article 3, specifically regarding the “sum certain” requirement and the presence of additional terms. North Dakota Century Code (NDCC) § 41-03-103(1)(e) defines a negotiable instrument as an unconditional promise or order to pay a sum certain in money and no other promise, order, obligation, or power given by the maker or drawer except as authorized by this article. NDCC § 41-03-104(1) further elaborates on what constitutes a “sum certain,” allowing for variations that are ascertainable from the instrument itself, such as stated interest or installments. In this scenario, the promissory note states a principal amount of \$5,000 payable on demand, with interest at the rate of “the prime rate as published in the Wall Street Journal on the date of issuance, plus two percent.” This provision for interest is permissible under NDCC § 41-03-104(1) because the rate, while variable, is determinable from an objective, published source. The additional clause stating “and the maker agrees to pay all costs of collection, including reasonable attorney’s fees, if this note is not paid when due” is also a permissible additional term under NDCC § 41-03-104(1)(d). This subsection explicitly allows for a promise to pay reasonable attorney’s fees or costs of collection if the instrument is dishonored. Therefore, the instrument meets the requirements of a negotiable instrument because the interest rate is ascertainable and the clause regarding collection costs is an authorized additional term. The note is a negotiable instrument.

In North Dakota, as under the Uniform Commercial Code (UCC) Article 3, the concept of “presentment” is crucial for the enforcement of negotiable instruments. Presentment is a demand made by the holder of an instrument for payment or acceptance. For a draft (like a check or a trade acceptance), presentment for acceptance is typically made to the drawee. For a note or a draft payable on demand, presentment for payment is made to the maker or the acceptor, respectively. The purpose of presentment is to alert the party primarily liable on the instrument that payment is due and to give them an opportunity to pay. Under UCC § 3-501, presentment is generally required to charge a secondary obligor (like an indorser) on a draft or a certificate of deposit. However, presentment is not required to charge the maker of a note or the acceptor of a draft. Furthermore, presentment is excused if the party to whom presentment is to be made cannot with reasonable diligence be found, or if that party is a bankrupt or in reorganization, or if that party’s obligation to pay has been repudiated or otherwise made impossible of performance. In the given scenario, the instrument is a promissory note, making the maker primarily liable. UCC § 3-412 states that the maker of a note is primarily liable on the instrument. UCC § 3-502(a) specifies that presentment is not required to charge the maker of a note. Therefore, the failure to present the note to Mr. Abernathy for payment does not discharge his obligation to pay the instrument. His liability as the maker remains intact. The holder can still enforce the note against him without having made a formal presentment.

Under North Dakota’s Uniform Commercial Code (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. To achieve HDC status, a person must take the instrument for value, in good faith, and without notice that the instrument is overdue or has been dishonored or that there is any defense or claim against it. The scenario describes a promissory note issued by AgriCorp to Prairie Seed Co. The note is payable on demand. The key issue is whether Ms. Anya Sharma, who received the note from Prairie Seed Co. as payment for consulting services, qualifies as a holder in due course. First, let’s establish the timeline and facts: 1. AgriCorp issues a promissory note payable on demand to Prairie Seed Co. 2. Prairie Seed Co. endorses the note in blank and delivers it to Ms. Sharma. 3. Ms. Sharma provides consulting services to Prairie Seed Co. in exchange for the note. 4. Before receiving the note, Ms. Sharma had no knowledge of any disputes or claims between AgriCorp and Prairie Seed Co. regarding the note. To be an HDC, Ms. Sharma must meet three criteria: 1. **Takes for value**: Providing consulting services constitutes giving value. Under UCC § 3-303, value can be given for a promise to render performance, or by performance of the promise. Ms. Sharma’s consulting services are a performance. 2. **Takes in good faith**: Good faith means honesty in fact and the observance of reasonable commercial standards of fair dealing. The facts provided do not suggest a lack of good faith. 3. **Takes without notice**: Ms. Sharma had no notice of any defense or claim against the instrument. The note is payable on demand, so it is not overdue until a reasonable time after demand has been made. There is no indication of dishonor. The critical element here is “without notice.” The fact that the note is payable on demand means it is not overdue until a reasonable time after demand for payment has been made. Since Ms. Sharma took the note before any demand was made or dishonor occurred, and without knowledge of any defenses, she meets the requirements of a holder in due course. She takes the note free from any defenses AgriCorp might have against Prairie Seed Co., such as failure of consideration, unless those defenses are of the type that cut off an HDC, which are typically limited to real defenses like infancy, duress, or material alteration. Therefore, Ms. Sharma is a holder in due course.

The scenario involves a negotiable instrument that was transferred by indorsement. The question hinges on determining when a holder in due course status is lost. A holder in due course (HDC) generally takes an instrument free from most defenses and claims. However, this status can be lost if the holder reacquires the instrument or if the instrument is paid or surrendered to a prior holder. In this case, the instrument was originally payable to “bearer” because it was made payable to a fictitious person and the maker did not intend it to be payable to the person named. Under North Dakota’s UCC Article 3, specifically N.D. Cent. Code § 41-03-110(3)(C) (UCC § 3-110(3)(C)), an instrument payable to a fictitious person to whom the signer does not intend to deliver the instrument is considered payable to bearer. When a bearer instrument is transferred, it typically requires only delivery. However, the critical point here is the subsequent reacquisition by the drawer, who is also the maker of the note. When the drawer reacquires the instrument, it is effectively discharged by payment or cancellation by the maker. This reacquisition and subsequent transfer to a third party does not revive the instrument as a valid obligation against the maker, as the maker has discharged their own liability. Therefore, the instrument is no longer enforceable against the maker, and the final holder cannot recover from the maker. The concept of reacquisition by the maker is a discharge event.

The core issue revolves around the concept of a holder in due course (HDC) and the defenses available against such a holder under North Dakota’s Uniform Commercial Code (UCC) Article 3. Specifically, the question probes whether a defense that arises from a separate transaction, rather than the instrument itself, can be asserted against an HDC. Under UCC § 3-305(a)(1), an HDC takes an instrument free of claims to it and defenses of any party to the instrument with whom the holder has not dealt, except for real defenses. Personal defenses, such as breach of contract or failure of consideration, are generally cut off by an HDC. However, UCC § 3-305(a)(2) specifies that an HDC takes subject to defenses arising from the transaction in which the instrument was issued, or defenses of any secondary obligor that are available to the primary obligor. Furthermore, UCC § 3-305(a)(3) states that an HDC takes subject to defenses of discharge in insolvency proceedings. In this scenario, the promissory note was issued in exchange for a promise of future services. The failure to provide those services constitutes a breach of contract, which is typically a personal defense. The fact that the breach occurred in a separate transaction from the issuance of the note, but is intrinsically linked to the consideration for the note, is crucial. North Dakota’s UCC § 3-305, like the general UCC, distinguishes between real defenses (e.g., infancy, duress, illegality of the transaction, fraudulent misrepresentation that the instrument is something other than what it purports to be) and personal defenses. A breach of contract for future services, while a failure of consideration, is generally considered a personal defense. Since the defense arises from the underlying transaction for which the note was given, and is not a real defense, it is cut off by an HDC. Therefore, the purchaser of the note, who took it for value, in good faith, and without notice of any claim or defense, is an HDC and can enforce the note despite the payee’s subsequent failure to provide services.

This scenario tests the concept of discharge of a party from liability on a negotiable instrument under North Dakota’s Uniform Commercial Code (UCC) Article 3. Specifically, it focuses on discharge by alteration and the impact of a material alteration that is not fraudulent. Under North Dakota Century Code (NDCC) § 41-03-20 (UCC § 3-407), a holder who knows an instrument has been completed without authority or has been altered without authorization, and then negotiates it, may enforce it according to its original tenor. However, if the alteration is fraudulent, any holder is barred from enforcing it. In this case, the alteration from $500 to $1,500 is material as it changes the contract. However, the explanation does not state that the alteration was fraudulent. If the alteration was not fraudulent, the instrument can be enforced according to its original tenor. Therefore, the holder can enforce the note for the original amount of $500 against the maker. The UCC distinguishes between fraudulent and non-fraudulent alterations. A non-fraudulent alteration, even if material, allows enforcement of the original tenor. A fraudulent alteration discharges the entire instrument as to all parties. Since the question does not specify fraud, the default application is to enforce the original terms.

The scenario describes a situation involving a negotiable instrument that has been materially altered. Under North Dakota Century Code Chapter 41-03 (UCC Article 3), a holder in due course (HDC) can enforce an instrument even if it has been altered, but only according to its original tenor. In this case, the original instrument was a draft for \$500.00. The alteration increased the amount to \$5,000.00. When a holder seeks to enforce an instrument that has been materially altered, and the holder is not an HDC, the holder can only enforce it according to its original tenor. If the holder is an HDC, they can enforce it according to its terms as originally issued. However, the question specifies that the holder is not an HDC. Therefore, the holder can only recover the original amount of the draft. The relevant concept here is the effect of material alteration on enforceability, particularly when the holder is not a holder in due course. North Dakota law, mirroring the Uniform Commercial Code, provides that a holder not in due course who takes an altered instrument may enforce it according to its original tenor. The alteration from \$500.00 to \$5,000.00 is a material alteration as it changes the obligation of the party making the instrument. Since the holder is not an HDC, they are subject to the defense of material alteration and can only recover the original amount. Thus, the holder can enforce the draft for \$500.00.

The core issue here revolves around the concept of “holder in due course” (HDC) status and its implications for defenses against payment on a negotiable instrument. Under UCC Article 3, as adopted in North Dakota, a holder in due course takes an instrument free from most real defenses and personal defenses. A real defense is one that can be asserted against any holder, including an HDC. Personal defenses, on the other hand, are generally cut off by an HDC. In this scenario, the original payee, Agri-Corp, is suing the maker, Mr. Kaelen. The instrument is a negotiable promissory note. Mr. Kaelen’s defense is that Agri-Corp failed to deliver the promised agricultural equipment, constituting a breach of contract. This failure of consideration is a personal defense, not a real defense. The question then becomes whether Agri-Corp, as the original payee, can be considered a holder in due course. The definition of a holder in due course requires that the holder take the instrument for value, in good faith, and without notice of any claim or defense. Since Agri-Corp is the original party to the transaction and is aware of its own breach of contract (failure to deliver equipment), it cannot meet the “without notice of any defense” requirement. Therefore, Agri-Corp is not a holder in due course. When the payee is not an HDC, they are subject to all defenses that would be available in a simple contract action. This means Mr. Kaelen can assert the defense of failure of consideration against Agri-Corp. The calculation is conceptual: 1. Identify the instrument type: Negotiable promissory note. 2. Identify the parties: Maker (Mr. Kaelen) and Payee (Agri-Corp). 3. Identify the defense: Failure of consideration (breach of contract by Agri-Corp). 4. Determine the nature of the defense: Failure of consideration is a personal defense. 5. Determine the status of the plaintiff: Agri-Corp is the original payee, not a subsequent holder. 6. Assess if the plaintiff qualifies as a Holder in Due Course (HDC): An HDC must take for value, in good faith, and without notice of any defense. As the original payee aware of its own breach, Agri-Corp has notice of Mr. Kaelen’s defense. 7. Conclusion: Agri-Corp is not an HDC. Therefore, it is subject to Mr. Kaelen’s personal defense of failure of consideration. The outcome is that Mr. Kaelen can successfully assert the defense against Agri-Corp.

The core issue here is whether a holder in due course (HIDC) status can be maintained when the instrument is returned to the issuer before maturity due to a breach of a separate, independent contract. Under North Dakota’s Uniform Commercial Code (UCC) Article 3, a person takes an instrument for value if the instrument is taken in payment of or as security for a preexisting claim that was given under the authority of the law. Furthermore, the holder must have taken the instrument without notice of any defense or claim of any kind that the person against whom enforcement is sought has. A breach of a separate contract that is wholly unrelated to the instrument itself does not automatically destroy the HIDC status of a holder who took the instrument for value and in good faith, without notice of the breach. In this scenario, the promissory note was given as part of a larger transaction involving the sale of goods. The issuer’s subsequent return of the goods and demand for the note’s return constitutes a breach of the sales contract. However, if the bank acquired the note for value (e.g., by crediting the seller’s account), in good faith, and without notice of the seller’s potential breach of the sales contract or any defenses the issuer might have against the seller, the bank’s HIDC status is generally preserved. The UCC distinguishes between defenses that are “real” (e.g., forgery, fraud in the factum) and “personal” (e.g., breach of contract, failure of consideration). A personal defense, such as a breach of a separate contract, is generally not available against an HIDC. The bank’s action of crediting the seller’s account is considered giving value. The question implies the bank acted without notice of the issuer’s defenses. Therefore, the bank, as a holder in due course, can enforce the note against the issuer, despite the issuer’s claim against the original seller for breach of the sales contract.

The core issue here revolves around the concept of presentment and the proper handling of a dishonored instrument under North Dakota’s Uniform Commercial Code (UCC) Article 3. When a bank, acting as a collecting bank, presents a negotiable instrument for payment and it is dishonored, the bank must provide notice of dishonor to its customer or any prior endorser. Under North Dakota UCC § 3-505, a bank can charge back any credit given for the item or obtain a refund from its customer if the item is dishonored. This right to charge back or obtain a refund is generally exercised by the bank notifying its customer of the dishonor and debiting the customer’s account for the amount of the item. North Dakota UCC § 4-214 also addresses the effect of dishonor and the bank’s right to revoke a settlement or charge back. The bank’s failure to provide timely notice of dishonor to its customer, as required by North Dakota UCC § 3-503, could potentially affect its rights, but the primary mechanism for recovering funds from a customer when an item is dishonored is through charge-back or refund. In this scenario, the bank has a right to recover the funds from its customer, Mr. Abernathy, because the check was dishonored by non-payment. The bank’s action of debiting Mr. Abernathy’s account is a permissible method of exercising its right to a refund or charge-back, as allowed by North Dakota law. The critical element is the dishonor of the check itself, which triggers the bank’s recourse against its customer.

The scenario involves a promissory note payable to “Bear Paw Ranch” that is later altered to read “Bear Paw Ranch and Sons.” This alteration is a material alteration because it changes the obligation of the parties by adding a payee. Under North Dakota’s Uniform Commercial Code (UCC) Article 3, specifically regarding negotiable instruments, a holder in due course (HDC) of an instrument that has been materially altered may enforce it according to its original tenor. However, a holder who is not an HDC, or a holder who is an HDC but the alteration was made by the holder, cannot enforce the instrument as altered, and generally cannot enforce it even in its original tenor if the alteration was fraudulent and the holder was the one who made it. In this case, the question states the note was “negotiated to Ms. Agnes Gable,” implying she is a holder. It does not specify if she is a holder in due course or if she made the alteration. The critical point is that a holder who is not an HDC is subject to the defense of material alteration. If Ms. Gable is not an HDC, she can only enforce the note according to its original tenor, meaning as if the alteration never occurred, assuming she did not perpetrate the alteration herself. If she is an HDC, she can enforce it according to its original tenor, not the altered tenor, unless the alteration was authorized. The question asks what Ms. Gable can enforce if she is *not* a holder in due course. In such a situation, the defense of material alteration is available against her. She cannot enforce the instrument as altered. Furthermore, if the alteration was fraudulent and she is not an HDC, she generally cannot enforce it at all. However, North Dakota UCC § 3-407(b) states that if an instrument is issued with a signature on it and the instrument is then stolen and completed or altered without authorization, the issuer is liable on the instrument as completed or altered if the issuer is a bank and the person against whom enforcement is sought is the bank’s customer. For non-bank issuers, if the alteration is unauthorized, the issuer is not liable on the altered instrument. The more common rule for non-bank issuers and non-bank holders not in due course is that the instrument cannot be enforced as altered, and often not at all if the alteration is fraudulent. Given the options, the most accurate representation of the UCC’s stance when a non-HDC holder faces a material alteration is that they cannot enforce the instrument as altered. The question implies an unauthorized alteration. Therefore, Ms. Gable, not being an HDC, can only enforce the instrument according to its original tenor, meaning as if the alteration had not occurred. However, the options provided do not directly reflect enforcing it in its original tenor when the alteration is material and fraudulent against a non-HDC. North Dakota UCC § 3-407(b) states that an altered instrument that is made not in due course can be enforced according to its original tenor. The key is that if she is not an HDC, she takes the instrument subject to the defense of material alteration. Therefore, she can enforce it as it was originally written, provided she did not commit the alteration. The question asks what she can enforce. The most straightforward application of UCC § 3-407(b) is that a holder not in due course can enforce the instrument according to its original tenor.

The core issue here is whether a check that has been post-dated constitutes a negotiable instrument under North Dakota’s Uniform Commercial Code (UCC) Article 3. Under North Dakota Century Code (NDCC) § 41-03-104(1)(c), a negotiable instrument must be payable on demand or at a definite time. A post-dated check, by its nature, is made payable on a date subsequent to its issuance. NDCC § 41-03-108(2) states that a draft payable on demand includes drafts payable “at sight” or “on presentation.” While a post-dated check is not immediately payable, the UCC generally treats post-dating as a specification of the time of payment rather than a condition that destroys negotiability, provided the date specified is a definite future date. The instrument is considered payable on the specified date. Therefore, a check post-dated to a specific future date is still considered payable at a definite time, fulfilling the requirements of negotiability under North Dakota law. The fact that it is post-dated does not, in itself, render it non-negotiable. The payee could still negotiate it, and a holder in due course could enforce it according to its terms, including presenting it for payment on or after the specified date.

The core issue here revolves around the concept of a holder in due course (HDC) and the defenses available against such a holder under North Dakota’s Uniform Commercial Code (UCC) Article 3. A party qualifies as an HDC if they take an instrument for value, in good faith, and without notice of any claim or defense. If an instrument is taken with knowledge of a defense, the holder cannot assert HDC status. In this scenario, Mr. Abernathy’s knowledge that the instrument was issued in exchange for a promise that might not be fulfilled, specifically the delivery of non-conforming goods, constitutes notice of a potential defense. This knowledge prevents him from being a holder in due course. Therefore, the defense of failure of consideration, which is a real defense, can be asserted against him by the maker, Ms. Gable. Real defenses are generally effective against all holders, including HDCs, but more importantly, they are effective against holders who are not HDCs. Personal defenses, such as breach of contract, are generally not effective against HDCs, but they are effective against holders who are not HDCs. Since Mr. Abernathy had notice of the potential failure of consideration at the time he acquired the instrument, he is not a holder in due course. Consequently, Ms. Gable can raise the defense of failure of consideration against Mr. Abernathy.

The core issue here revolves around the negotiability of a draft that contains a condition subsequent. Under UCC Article 3, specifically as adopted in North Dakota, a negotiable instrument must contain an unconditional promise or order to pay a fixed amount of money. A condition subsequent, which is an event that will terminate an existing obligation, renders the promise or order conditional. In this scenario, the payment of the draft is contingent upon the satisfactory completion of the construction project. If the project is not completed to the satisfaction of the client, the obligation to pay the draft ceases to exist. This condition directly impacts the unconditional nature required for negotiability. Therefore, the draft is not a negotiable instrument.

The scenario involves a negotiable instrument that has been altered. Under North Dakota’s Uniform Commercial Code (UCC) Article 3, specifically focusing on the rights of a holder in due course (HDC) and the effect of unauthorized alterations, the general rule is that an HDC can enforce the instrument as originally issued if the alteration is fraudulent. However, if the alteration is not fraudulent, the HDC can enforce it according to its tenor at the time of the alteration. In this case, the principal amount was increased from $5,000 to $15,000, which is a material alteration because it changes the obligation of the party. Since the question specifies that the alteration was made by a third party without the drawer’s knowledge and the holder purchased the instrument without notice of the alteration, this holder would likely qualify as a holder in due course. A fraudulent alteration by a holder would discharge the drawer’s obligation, but a fraudulent alteration by a third party, or a non-fraudulent alteration, allows the HDC to enforce the instrument as originally issued. Therefore, the holder in due course can enforce the note for the original amount of $5,000. The UCC § 3-407(b) states that if an instrument is materially and fraudulently altered, the effect is to discharge any party whose contract is thereby changed unless that party assents. However, § 3-407(c) clarifies that if an instrument is materially altered but not fraudulently, the holder may enforce the instrument according to its tenor at the time of the alteration. But the more pertinent principle for an HDC facing a third-party alteration is that they can enforce it as originally issued. North Dakota follows these general UCC principles. The critical distinction is whether the alteration was fraudulent and by whom. Since it was a third party, the original obligation is preserved for an HDC.

The core issue here is whether a subsequent holder in due course can enforce a note that was originally issued in violation of North Dakota’s usury laws. North Dakota Century Code Section 32-03-07 generally prohibits charging interest rates exceeding a certain statutory limit, rendering contracts that violate this provision voidable or void depending on the specific circumstances and intent. However, under UCC Article 3, a holder in due course (HDC) takes an instrument free from most defenses, including illegality of the transaction, unless the illegality is of a type that renders the instrument void from its inception. Illegality of the transaction, such as a violation of usury laws, is generally considered a personal defense, not a real defense that can be asserted against an HDC. A real defense, which can be asserted against any holder, typically involves issues like forgery, material alteration, or a defense of infancy. A personal defense, on the other hand, is one that can be asserted against a holder who is not an HDC, but not against an HDC. Since the note was made in North Dakota, the state’s usury laws are applicable. However, the UCC, specifically Article 3, governs the rights of holders in due course. North Dakota has adopted Article 3 of the UCC. The principle is that an HDC is protected from defenses arising from the underlying transaction, including usury, unless the usury law specifically declares the instrument void ab initio (from the beginning). North Dakota’s usury statute, as interpreted in similar contexts, typically renders the interest void, but not necessarily the principal amount or the entire instrument itself void from inception, especially when a third-party HDC is involved. Therefore, an HDC who takes the note without notice of the usury violation can still enforce the note for the principal amount. The question specifies the note was issued in violation of North Dakota’s usury laws. The critical element is that the note was transferred to a holder in due course. Under UCC § 3-305(a)(1)(ii), an HDC takes the instrument free of defenses of any party to the instrument with whom the holder has not dealt except for defenses of a type that under subsection (b) of that section would cut off a simple contract. Subsection (b) lists real defenses. Illegality of the transaction is generally a personal defense, not a real defense, unless the law governing the transaction makes the instrument void. North Dakota law makes the interest void, but not the principal or the instrument itself void ab initio in this context. Therefore, the holder in due course can enforce the note for the principal amount.

The core issue here is determining the enforceability of the instrument against the drawer, considering the presentment and notice of dishonor rules under North Dakota’s Uniform Commercial Code (UCC) Article 3. A draft (like a check) is an order to pay. When presented for payment and dishonored, the holder must give notice of dishonor to the drawer to preserve their right to recourse against the drawer. North Dakota Century Code (NDCC) § 41-03-50 (UCC § 3-503) outlines the time for presentment for payment. NDCC § 41-03-51 (UCC § 3-504) details how presentment is made. NDCC § 41-03-52 (UCC § 3-505) specifies when notice of dishonor must be given. Crucially, NDCC § 41-03-48 (UCC § 3-48) states that the drawer of a draft is discharged from liability on the instrument if notice of dishonor is not given to the drawer in accordance with NDCC § 41-03-52, unless the drawer is otherwise discharged from liability. In this scenario, the check was presented to the bank on October 15th, and the bank dishonored it. The holder, Ms. Petrova, failed to give notice of dishonor to Mr. Abernathy (the drawer) until October 25th. According to NDCC § 41-03-52(1), notice must be given by a bank before midnight of the next banking day after dishonor. For any other person, notice must be given within 30 days after the dishonor. Ms. Petrova’s notice on October 25th falls within this 30-day period. However, the critical aspect is that the drawer is discharged if notice is *not given* in accordance with the statute. The statute allows 30 days for a non-bank holder to give notice. Since Ms. Petrova gave notice within 30 days, the drawer is not discharged due to lack of timely notice. The bank’s dishonor is a matter between the holder and the bank, and the reason for dishonor (insufficient funds) is a valid basis for dishonor. The question is about the holder’s ability to recover from the drawer. Since timely notice was given by the non-bank holder, the drawer remains liable.

In North Dakota, 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. To achieve HDC status, a holder must take the instrument for value, in good faith, and without notice that it is overdue or has been dishonored or that any defense or claim to it exists. Notice is a critical element. A holder has notice if they have actual knowledge, receive notice from another party, or have reason to know from all the facts and circumstances known to them at the time that the instrument is overdue, has been dishonored, or is subject to a defense or claim. For example, if a holder receives a check that is post-dated by an unreasonable amount of time, such as a year, and negotiates it, they would likely have reason to know of a defense or claim associated with the underlying transaction, thus preventing HDC status. The concept of “value” is also crucial; it means the holder has performed the promise for which the instrument was issued, or has acquired the instrument as payment of or security for an antecedent debt. Good faith is defined as honesty in fact and the observance of reasonable commercial standards of fair dealing. If a holder knows or has reason to know that the instrument was issued in violation of law or that the issuer had a defense, they cannot be a holder in due course. The scenario presented involves a negotiable instrument that, due to its unusual dating, would put a reasonable commercial party on notice of potential issues, thereby preventing the acquisition of holder in due course status.

The scenario involves a promissory note issued by a business in North Dakota, which is governed by UCC Article 3. The core issue is whether the note, containing a clause for attorney’s fees and collection costs upon default, remains a negotiable instrument. Under UCC § 3-104(a), 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. UCC § 3-104(a)(1) specifies that the promise must be unconditional. While the inclusion of attorney’s fees and collection costs in an instrument can sometimes render it non-negotiable if it constitutes an additional obligation or a condition precedent to payment, UCC § 3-104(a)(1) and its official comments clarify that such provisions do not, by themselves, make the promise conditional for the purposes of negotiability. These clauses are generally considered incidental to the primary obligation to pay money and do not affect the certainty of payment or the amount due. Therefore, the note’s promise to pay a fixed sum of money, despite the attorney’s fees clause, is still considered unconditional for negotiability purposes under North Dakota law, which follows the UCC. The note meets the other requirements of negotiability: it’s a signed writing, promises to pay a fixed amount of money ($50,000), is payable on demand, and is payable to the order of a named payee.

The core concept here revolves around the holder in due course (HDC) status and the defenses available against such a holder under UCC Article 3, as adopted in North Dakota. A negotiable instrument is transferred by endorsement and delivery. The initial payee, Barnaby, negotiated the instrument to Clara. For Clara to be a holder in due course, she must take the instrument for value, in good faith, and without notice of any claim or defense against it. The scenario states Clara purchased the note for $9,500, which constitutes value. There is no indication she acted in bad faith or had notice of Barnaby’s prior dealings with Agnes. Therefore, Clara is presumed to be a holder in due course. The critical point is that Agnes’s defense of fraud in the inducement is a personal defense, not a real defense. Personal defenses, such as fraud in the inducement, breach of contract, or lack of consideration, are generally cut off when an instrument is held by a holder in due course. Real defenses, like forgery, material alteration, or discharge in insolvency proceedings, can be asserted even against an HDC. Since Agnes’s claim that Barnaby misrepresented the value of the antique clock she received in exchange for the note is fraud in the inducement, this personal defense cannot be asserted against Clara, assuming she qualifies as a holder in due course. North Dakota’s UCC Article 3, specifically § 3-305, outlines the defenses available against a holder. Fraud in the inducement is not listed as a real defense. Therefore, Clara, as a holder in due course, can enforce the note against Agnes according to its terms.

The scenario involves a promissory note that is payable to “bearer.” Under North Dakota’s Uniform Commercial Code (UCC) Article 3, specifically focusing on the definition of a negotiable instrument and the requirements for negotiability, an instrument is payable to bearer if it states that it is payable to bearer or to the order of bearer, or if it does not state a payee or otherwise indicates that it is not payable to an identified person. In this case, the note is made payable to “Cash.” North Dakota UCC § 3-109(c) clarifies that an instrument is payable to bearer if it is payable to “cash,” “money,” or any other unit of money, or if it is not payable to an identified person. Therefore, a note payable to “Cash” is considered a bearer instrument. A holder of a bearer instrument, under North Dakota UCC § 3-301, can enforce it by possessing the instrument and being entitled to enforce it. This entitlement arises from being the person in possession of the instrument if it is bearer paper. Consequently, the person in physical possession of the note payable to “Cash” is the holder entitled to enforce it, regardless of whether they are named in the instrument or have any other specific right to it, as long as they are the rightful possessor of bearer paper.