Chapter 16
Chapter 16 Case Hypothetical and Ethical Dilemma Glenn Liam Baubeck, III, an avid Republican, owes Harry S. Kennedy, a Democrat, $1,000 for fifty (50) expensive cigars that Harry sold him. In return for the cigars, Glenn issued a promissory note with the following language: “I, Glenn Liam Baubeck, promise to pay to the order of Harry S. Kennedy the sum of one thousand and no/100 dollars ($1,000), due and payable on November 7, 2012. Signed, Glenn Liam Baubeck.” At the bottom of the promissory note, Glen included the following language: “This promissory note is invalid if a Republican wins the United States presidential election on November 6, 2012.” Harry neglected to read this statement on the bottom of the promissory note. November 6, 2012 arrived, and Republican Ronald W. Goldwater became the forty-fifth president of the United States. On November 7, Harry approached Glenn with the promissory note, and requested to be paid the $1,000 face value of the note. Glenn replied “Gotcha, Harry! I don’t owe you one red cent. Look at what I wrote with my nicotine-stained fingers on the bottom of the note!” Harry was not the confrontational type (in fact, he hated confrontation) but he still felt that Glenn was legally obligated to pay the $1,000. Is this promissory note a negotiable instrument? If it is not, is Glenn Liam Baubeck not obligated to pay Harry S. Kennedy the $1,000?
Chapter 16 Case Hypothetical Tom Bradshau and Ron Stawback are avid football fans; Bradshau is a rabid Pittsburgh Ironmen supporter, and Stawback’s favorite team is the Dallas Cattle Ranchers. The two teams are bitter rivals, and are scheduled to play during Week 4 of the 2008 United Football League (UFL) schedule. Before the season starts, Bradshau and Stawback wager a bet that their respective teams will win in the Ironmen-Cattle Ranchers clash. Bradshau presents $500 in cash to secure the bet, and Stawback produces a written “I.O.U.,” stating the following: “In the event that the Pittsburgh Ironmen defeat the Dallas Cattle Ranchers in Week 4 of the 2008 UFL season, I promise to pay the sum of five hundred and no/100 dollars ($500) to the order of Tom Bradshau. Signed, Ron Stawback.” In Week 3 of the UFL season, Bradshau indorses and transfers the Stawback I.O.U to Kenneth Steibler, in payment of a lost $500 bet to Steibler (Steibler’s favorite team, the Oakland Swashbucklers, defeated Bradshau’s Ironmen in Week 3.) In Week 4, the Ironmen defeat the Cattle Ranchers. Can Steibler recover the $500 face amount of the I.O.U. from Stawback?
Negotiable Instrument
Types of Negotiable Instruments
“Demand” Instrument Versus “Time” Instrument
Types of Checks
Requirements For Negotiability
“Order” Versus “Bearer” Paper
“Negotiable Instrument” Terminology
Negotiation Requirements
Types of Endorsements
Non-criminal Endorsement Problems
Non-Criminal Endorsement Problems (Continued)
Check Transactions
Terminology Regarding Check Transactions
Terminology Regarding Check Transactions (Continued)
Terminology Regarding Acceptance of Deposits
Check Clearing For The 21st Century Act
“Substitute Check” Requirements
The Truth-In-Savings Act
When Bank May Charge Customer’s Account
When Bank May Charge Customer’s Account (Continued)
Forgeries and Alterations
Electronic Fund Transfer
Electronic Fund Transfers (EFTs): Customer Rights and Responsibilities
Electronic Fund Transfers (EFTs): Customer Rights and Responsibilities (Continued)
Unauthorized Electronic Transfer
E-Money and Online Banking