(BQ) Part 2 book Business law has contents: Negotiable instruments; negotiation and holder in due course, checks and electronic transfers, the agency relationship, the agency relationship, history and nature of corporations, management of corporations, administrative agencies, employment law, environmental regulation,...and other contents.
mal77643_ch31.qxd Part Seven Seven Part Seven Part Seven Part Seven Part Seven Part Seven Part Seven Part 12/26/08 Part Seven Seven Part Seven Part Seven Part Seven Part Seven Part Seven Part Seven Part 1:49 PM Part Seven Seven Part Seven Part Seven Part Seven Part Seven Part Seven Part Seven Part Page 805 Part Seven Part Seven Part Seven Seven Part Seven Part Seven Part Seven www.downloadslide.com Part Seven Part Seven Part Seven Part Seven Part Seven Part Seven Part Seven Part Seven Part Seven Part Seven Part Seven Part Seven Part Seven Part Seven Part Seven Part Seven Part Seven Part Part Seven chapter 31 Part Seven Seven Part Seven Part Seven Part Seven Part Seven Part Seven Part Seven Part Part Seven Seven Part Seven Part Seven Part Seven Part Seven Part Seven Part Seven Part Part Seven Part Seven Part Seven Part Seven Part Seven Part Seven Part Seven Part Seven Part Commercial Paper Negotiable Instruments chapter 32 Negotiation and Holder in Due Course chapter 33 Liability of Parties chapter 34 Checks and Electronic Transfers 805 mal77643_ch31.qxd 12/26/08 1:49 PM Page 806 www.downloadslide.com chapter 31 NEGOTIABLE INSTRUMENTS C hances are that you are using a variety of negotiable instruments in your everyday life, perhaps without realizing the special qualities that have led to their widespread use in commerce and the rules that govern them If you have a job, your employer probably pays you by check, and you likely have a checking account that you use to make purchases and pay your bills If you have accumulated some savings, you may have invested them in a certificate of deposit at a bank And, if you have borrowed money, you very likely were asked to sign a promissory note acknowledging the debt and committing to repay it on specified terms This chapter introduces the law of negotiable instruments, including: • The special qualities and benefits of negotiable instruments • The basic types of commercial paper and their defining characteristics • The formal requirements that must be met for instruments such as checks, notes, and certificates of deposit to qualify as negotiable instruments • What happens if you write or receive a check in which there is a conflict between the amount set forth in figures and the amount set out in words • Whether it was ethical for the purchaser of two engines to deliberately place two different amounts on a check (one figure using a check-writing machine and the other by writing numerals in handwriting) that was sent in payment for the engines AS COMMERCE AND TRADE developed, people moved beyond exclusive reliance on barter to the use of money and then to the use of substitutes for money The term commercial paper encompasses substitutes in common usage today such as checks, promissory notes, and certificates of deposit History discloses that every civilization that engaged to an appreciable extent in commerce used some form of commercial paper Probably the oldest commercial paper used in the carrying on of trade is the promissory note Archaeologists found a promissory note made payable to bearer that dated from about 2100 B.C The merchants of Europe used commercial paper—which, under the law merchant, was negotiable—in the 13th and 14th centuries Commercial paper does not appear to have been used in England until about A.D 1600 This chapter and the three following chapters outline and discuss the body of law that governs commercial paper Of particular interest are those kinds of commercial paper having the attribute of negotiability—that is, they can generally be transferred from party to party and accepted as a substitute for money This chapter discusses the nature and benefits of negotiable instruments and then outlines the requirements an instrument must meet to qualify as a negotiable instrument Subsequent chapters discuss transfer and negotiation of instruments, the rights and liabilities of parties to negotiable instruments, and the special rules applicable to checks Nature of Negotiable Instruments When a person buys a television set and gives the merchant a check drawn on his checking account, that person uses a form of negotiable commercial paper Similarly, a person who goes to a bank or a credit union to borrow money might sign a promissory note agreeing to pay the money back in 90 days Again, the bank and borrower use a form of negotiable commercial paper mal77643_ch31.qxd 12/26/08 1:49 PM Page 807 www.downloadslide.com Chapter Thirty-One Negotiable Instruments Commercial paper is basically a contract for the payment of money It may serve as a substitute for money payable immediately, such as a check Or, it can be used as a means of extending credit When a television set is bought by giving the merchant a check, the check is a substitute for money If a credit union loans a borrower money now in exchange for the borrower’s promise to repay it later, the promissory note signed by the borrower is a means of extending credit Uniform Commercial Code The law of commercial paper is covered in Article (Negotiable Instruments) and Article (Bank Deposits and Collections) of the Uniform Commercial Code Other negotiable documents, such as investment securities and documents of title, are treated in other articles of the Code The original Code Articles and 4, adopted initially in the 1960s, generally followed the basic, centuries-old rules governing the use of commercial paper; but at the same time they adopted modern terminology and coordinated, clarified, and simplified the law However, business practices continued to evolve and new technological developments have changed the way that banks process checks Accordingly, in 1990 a Revised Article 3, along with related amendments to Articles and 4, were developed and have now been adopted by all states except New York However, the reader should keep in mind that instruments may be interpreted under the version of the Code that was in effect when the instruments were issued Negotiable Instruments The two basic types of negotiable instruments are promises to pay money and orders to pay money Promissory notes and certificates of deposit issued by banks are promises to pay someone money Checks and drafts are orders to another person to pay money to a third person A check, which is a type of draft, is an order directed to a certain kind of person, namely a bank, to pay money from a person’s account to a third person Negotiability Negotiable instruments are a special kind of commercial paper that can pass readily through our financial system and is accepted in place of money This gives negotiable instruments many advantages For example, Searle, the owner of a clothing store in New York, contracts with Amado, a swimsuit manufacturer in Los Angeles, for $10,000 worth of swimsuits If negotiable instruments did not exist, Searle would have to send or carry $10,000 across the country, which would be both inconvenient and risky If someone stole the money along the way, Searle would lose the $10,000 807 unless he could locate the thief By using a check in which Searle orders his bank to pay $10,000 from his account to Amado, or to someone designated by Amado, Searle makes the payment in a far more convenient manner He sends only a single piece of paper to Amado If the check is properly prepared and sent, sending the check is less risky than sending money Even if someone steals the check along the way, Searle’s bank may not pay it to anyone but Amado or someone authorized by Amado And, because the check gives Amado the right either to collect the $10,000 or to transfer the right to collect it to someone else, the check is a practical substitute for cash to Amado as well as to Searle In this chapter and in the three following chapters, we discuss the requirements necessary for a contract for the payment of money to qualify as a negotiable instrument We also explain the features that not only distinguish a negotiable instrument from a simple contract but also led to the widespread use of negotiable instruments as a substitute for money Kinds of Negotiable Instruments Promissory Notes The promissory note is the simplest form of commercial paper; it is simply a promise to pay money A promissory note is a two-party instrument in which one person (known as the maker) makes an unconditional promise in writing to pay another person (the payee), a person specified by that person, or the bearer of the instrument, a fixed amount of money, with or without interest, either on demand or at a specified, future time [3–104].1 The promissory note, shown in Figures and 2, is a credit instrument; it is used in a wide variety of transactions in which credit is extended For example, if a person purchases an automobile using money borrowed from a bank, the bank has the person sign a promissory note for the unpaid balance of the purchase price Similarly, if a person borrows money to purchase a house, the lender who makes the loan and takes a mortgage on the house has the person sign a promissory note for the amount due on the loan The note probably states that it is secured by a mortgage The terms of payment on the note should correspond with the terms of the sales contract for the purchase of the house The numbers in brackets refer to the sections of the 1990 Revised Article (and the conforming amendments to Articles and 4) of the Uniform Commercial Code mal77643_ch31.qxd 12/26/08 1:49 PM Page 808 www.downloadslide.com 808 Part Seven Commercial Paper Figure Promissory Note July 1, 2010 $1,000.00 Days after Date 90 Payee I Promise to Pay to the Order of Amanda Brown One Thousand And No/100 - - - - - - - - Dollars 10 with Interest at Rate of Percent per Annum No Due Certificates of Deposit The certificate of deposit given by a bank or a savings and loan association when a deposit of money is made is a type of note, namely a note of a bank A certificate of deposit is an instrument containing (1) an acknowledgment by a bank that it has received a deposit of money and (2) a promise by the bank to repay the sum of money [3–104(j)] Most banks no longer issue certificates of deposit (CD) in paper form Rather, the bank maintains an electronic deposit and provides the customer with a statement indicating the amount of principal held on a CD basis and the terms of the CD, such as the maturity and interest rate In these instances, the certificate of deposit is not in negotiable instrument form Drafts A draft is a form of commercial paper that involves an order to pay money rather than a promise to pay money [3–104(e)] The most common example of a draft is a check A draft has three parties to it: one person (known as the drawer) orders a second person (the drawee) to pay a certain sum of money to a third person (the payee), to a person specified by that person, or to bearer Drafts other than checks are used in a variety of commercial transactions If Brown owes Ames money, Ames may draw a draft for the amount of the debt, naming Brown as drawee and herself or her bank as payee, and send the draft to Brown’s bank for payment Alternatively, Ames might send a draft providing for payment on a certain day in the future to Brown for “acceptance.” Brown could “accept” the draft by signing his name to it, thereby obligating himself to pay the amount specified in the draft on that day in the future to Ames or to someone specified by Ames Automobile dealers selling to each other, or selling cars at auctions, commonly use drafts, as sellers and buyers of livestock October 1, 2010 Maker In freight shipments in which the terms are “cash on delivery,” the seller commonly ships the goods to the buyer on an “order bill of lading” consigned to himself at the place of delivery The seller then indorses the bill of lading and attaches a draft naming the buyer as drawee He then sends the bill of lading and the draft through banking channels to the buyer’s bank A bank in the buyer’s locale presents the draft to the buyer’s bank for payment, and when the former bank receives payment, delivers the bill of lading to the buyer Through this commercial transaction, the buyer gets the goods and the seller gets his money When credit is extended, the same procedure is followed, but the seller uses a time draft—a draft payable at some future time (see Figure 3) In such a transaction, the buyer “accepts” the draft (instead of paying it) and obligates herself to pay the amount of the draft when due In these cases, the drawee (now called the acceptor) should date her signature so that the date at which payment is due is clear to all [3–409(c)] As a consumer, you are most likely to encounter drafts when your insurance company pays a claim— you’ll see that often it is denoted as a “DRAFT” and indicates that it is payable through a particular bank This notation means that the bank will pay the draft to you only after it has checked with the insurance company (the drawer) and the insurance company authorizes the bank to pay the instrument Checks A check is a draft payable on demand and drawn on a bank (i.e., a bank is the drawee or person to whom the order to pay is addressed) Checks are the most widely used form of commercial paper The issuer of a check orders the bank at which she maintains an account to pay a specified person, or someone designated by that person, a fixed amount of money from the mal77643_ch31.qxd 12/26/08 1:49 PM Page 809 www.downloadslide.com Chapter Thirty-One Negotiable Instruments 809 Figure Promissory Note (Consumer Loan Note) The National BANK OF WASHINGTON Date # CONSUMER LOAN NOTE , 20 November 21, The words I and me mean all borrowers who signed this note The word bank means The National Bank of Washington Payee Promise to Pay 30 months from today, I promise to pay to the order of The National Bank of Washington Seventy-Eight Hundred Seventy Five and no/100 - - - - - - - - - - -dollars ($ 7,875.00) Responsibility Although this note may be signed below by more than one person, I understand that we are each as individuals responsible for paying back the full amount Breakdown of Loan This is what I will pay: Amount of loan Credit Life Insurance (optional) Other (describe) 1.$ 6,800.00 2.$ 100.00 3.$ -0- Amount Financed (Add and and 3) 4.$ FINANCE CHARGE 5.$ Total of Payments $ (Add and 5) ANNUAL PERCENTAGE RATE 6,900 975.00 7,875.00 10.5% Repayment This is how I will repay: 30 I will repay the amount of this note in equal uninterrupted monthly installments of $ 262.50 each on the 1st day of each month starting on the 1st day of December , 20 10 and ending May , 2013 on Prepayment I have the right to prepay the whole outstanding amount of this note at any time If I do, or if this loan is refinanced—that is, replaced by a new note—you will refund the unearned finance charge, figured by the rule of 78—a commonly used formula for figuring rebates on installment loans Late Charge Any installment not paid within ten days of its due date shall be subject to a late charge of 5% of the payment, not to exceed $5.00 for any such late installment Security To protect the National Bank of Washington, I give what is known as a security interest in my auto and/or other: (Describe) Ford Thunderbird # Serial #115117-12- 10 Credit Life Insurance Credit life insurance is not required to obtain this loan The bank need not provide it and I not need to buy it unless I sign immediately below The cost of credit life insurance is $ 100.00 for the term of the loan Signed: Date: November 21, 2010 Default If for any reason I fail to make any payment on time, I shall be in default The bank can then demand immediate payment of the entire remaining unpaid balance of this loan, without giving anyone further notice If I have not paid the full amount of the loan when the final payment is due, the bank will charge me interest on the unpaid balance at six percent (6%) per year Right of Offset If this loan becomes past due, the bank will have the right to pay this loan from any deposit or security I have at this bank without telling me ahead of time Even if the bank gives me an extension of time to pay this loan, I still must repay the entire loan Collection Fees If this note is placed with an attorney for collection, then I agree to pay an attorney's fee of fifteen percent (15%) of the unpaid balance This fee will be added to the unpaid balance of the loan Co-borrowers If I am signing this note as a co-borrower, I agree to be equally responsible with the borrower for this loan The bank does not have to notify me that this note has not been paid The bank can change the terms of payment and release any security without notifying or releasing me from responsibility for this loan Copy Received I received a completely filled in copy of this note If I have signed for Credit Life Insurance, I received a copy of the Credit Life Insurance certificate Maker Borrower: A J Smith 3412 Brookdale, S W Washington D.C Address Co-maker Co-borrower: Andrea H Smith 3412 Brookdale, S W Washington D.C Address Co-borrower: See the security agreement Address CONSUMER CREDIT HOTLINE: If you have any questions, please call us immediately at (202) 624-3450 NBW 437 (Rev 11-78) 1-Bank's copy 2-File copy 3-Customer's copy Source: The National Bank of Washington account For example, Elizabeth Brown has a checking account at the National Bank of Washington She goes to Sears Roebuck and agrees to buy a washing machine priced at $459.95 If she writes a check to pay for it, she is the drawer of the check, the National Bank of Washington is the drawee, and Sears is the payee By writing the check, Elizabeth is ordering her bank to pay $459.95 from her account to Sears or to Sears’s order— that is, to whomever Sears asks the bank to pay the money (see Figure 4) An instrument may qualify as a “check” and be governed by Article even though it is described on its face mal77643_ch31.qxd 12/30/08 10:18 AM Page 810 www.downloadslide.com 810 Part Seven Commercial Paper Figure Draft PROTEST NO 20 10 Drawer Drawee TAKE THIS OFF BEFORE PRESENTING Payee Payee Drawee CYBERLAW IN ACTION E-Checks In addition to checks, electronic funds transfers through the use of ATMs or in retail stores, and telephone-initiated checks, larger retailers such as grocers and department stores use e-commerce instead of traditional paper checks This process, called “check conversion,” starts with the buyer giving the seller a paper check The seller uses special equipment to gather information from the paper check; this information includes the buyer’s bank account number, the “routing number” that identifies the buyer’s bank, and the check’s serial number Then, the seller hands the paper check back to the buyer and completes the transaction by naming itself as the payee of the transaction and by coding in the amount of the purchase Check conversion is one of the fastest-growing means of taking payments from consumer buyers and saves the seller time and money it otherwise would spend collecting the paper check from the buyer’s bank The legal rules concerning e-checks are discussed in Chapter 34—Checks and Electronic Transfers Figure Check Payee 20 10 The National BANK OF WASHINGTON Drawee Drawer mal77643_ch31.qxd 12/26/08 1:49 PM Page 811 www.downloadslide.com Chapter Thirty-One Negotiable Instruments by another term, such as “money order.” The Code definition of a “check” includes a “cashier’s check” and a “teller’s check.” A cashier’s check is a draft on which the drawer and drawee are the same bank (or branches of the same bank); a teller’s check is a draft drawn by a bank (as drawer) on another bank or payable at or through a bank [3–104(g) and (h)] For example, a check drawn by a credit union on its account at a federally insured bank would be a teller’s check Benefits of Negotiable Instruments Rights of an Assignee of a Contract As we noted in Chapter 17, Rights of Third Parties, the assignee of a contract can obtain no greater rights than the assignor had at the time of the assignment For example, Browning Construction Company agrees to build an inground swimming pool pursuant to plans provided by Geraldo Garcia At the time the contract is signed by the two parties on March 1, Garcia makes a down payment of $5,000 and agrees to pay the balance of $20,000 when Browning Construction completes the pool If on April 1, Browning Construction assigns its rights under the contract to First Bank—including the right to collect the money from Garcia—then First Bank will obtain whatever rights Browning Construction has at the time First Bank seeks to collect the balance due on the contract If Browning Construction has completed its work consistent with the plans, then First Bank is entitled to be paid the $20,000 However, if the work has not been completed, or was not done consistent with the plans, then Garcia may have a valid defense or reason to avoid paying the full $20,000 Taking an assignment of a contract involves assuming certain risks The assignee (First Bank) may not be aware of the nature and extent of any defenses that the party liable on the contract (Garcia) might have against the assignor (Browning Construction) An assignee who does not know what rights he is getting, or which risks he is assuming, may be reluctant to take an assignment of the contract Rights of a Holder of a Negotiable Instrument The object of a negotiable instrument is to have it accepted readily as a substitute for money In order to accept it readily, a person must be able to take it free of many of the risks assumed by the assignee of a regular contract Under the law of negotiable instruments, this is possible if two conditions are met: (1) the contract for the payment of money must meet the formal 811 requirements to qualify as a negotiable instrument; and (2) the person who acquires the instrument must qualify as a holder in due course Basically, a holder in due course is a person who has good title to the instrument, paid value for it, acquired it in good faith, and had no notice of certain claims or defenses against payment In addition, the instrument cannot bear facial irregularities (evidence of forgery or alteration or questions concerning its authenticity) The next section of this chapter discusses the formal requirements for a negotiable instrument Chapter 32, Negotiation and Holder in Due Course, outlines the requirements that a person must meet to qualify as a holder in due course A holder in due course of a negotiable instrument takes the instrument free of all defenses and claims to the instrument except those that concern its validity For example, a holder in due course of a note given in payment for goods may enforce the obligation in spite of the buyer’s claim that the seller breached a warranty However, if the maker of a note wrote it under duress, such as a threat of force, or was a minor, then even a holder in due course is subject to the defenses of duress or infancy to the extent other law (1) would nullify the obligation for duress or (2) would permit infancy as a defense to a simple contract The person who holds the note could not obtain the payment from the maker but would have to recover from the person from whom he got the note The Federal Trade Commission (FTC) has adopted a regulation that alters the rights of a holder in due course in consumer purchase transactions This regulation allows a consumer who gives a negotiable instrument to use additional defenses (breach of warranty or fraudulent inducement) against payment of the instrument against even a holder in due course Similarly, some states have enacted the Uniform Consumer Credit Code (UCCC), which produces a similar result Chapter 32, Negotiation and Holder in Due Course, discusses the rights of a holder in due course, as well as the FTC rule Formal Requirements for Negotiability Basic Requirements An instrument such as a check or a note must meet certain formal requirements to be a negotiable instrument If the instrument does not meet these requirements, it is nonnegotiable; that is, it is treated as a simple contract and not as a negotiable instrument A primary purpose for these formal requirements is to ensure the willingness of prospective mal77643_ch31.qxd 12/26/08 1:49 PM Page 812 www.downloadslide.com 812 Part Seven Commercial Paper purchasers of the instrument, particularly financial institutions such as banks, to accept it as a substitute for money For an instrument to be negotiable, it must: Be in writing Be signed by the issuer (the maker in the case of a person undertaking to pay or the drawer in the case of a person giving an order or instruction to pay) Contain an unconditional promise or order to pay a fixed amount of money, with or without interest or other charges described in the promise or order Be payable to order or to bearer Be payable on demand or at a definite time Not state any other undertaking or instruction by the person promising or ordering to any act in addition to the payment of money (however, it may contain (a) an undertaking or promise relative to collateral to secure payment, (b) an authorization for confession of judgment, or (c) a waiver of benefit of any law intended for the advantage or protection of an obligor) [3–103; 3–104] In addition, an instrument that otherwise qualifies as a check can be negotiable even if it is not explicitly payable to order or to bearer [3–104(c)] As explained later, this means that a check that reads “pay John Doe” could be negotiable even though the normal form for a check is “pay to the order of _.” A promise or order other than a check is not a negotiable instrument if at the time it is issued or first comes into the possession of a holder it contains a conspicuous statement that the promise or order is not negotiable or is not an instrument governed by Article [3–104(d)] For example, if a promissory note contained the legend “NONNEGOTIABLE,” it would not qualify as a negotiable instrument even if it otherwise met the formal requirements for one Importance of Form Whether or not an instrument satisfies these formal requirements is important only for the purpose of determining whether an instrument is negotiable or nonnegotiable Negotiability should not be confused with validity or collectibility If an instrument is negotiable, the law of negotiable instruments in the Code controls in determining the rights and liabilities of the parties to the instrument If an instrument is nonnegotiable, the general rules of contract law control The purpose of determining negotiability is to ascertain whether a possessor of the instrument can become a holder in due course An instrument that meets all of the formal requirements is a negotiable instrument even though it is void, voidable, unenforceable, or uncollectible for other reasons Negotiability is a matter of form and nothing else Suppose a person gives an instrument in payment of a gambling debt in a state that has a statute declaring that any instrument or promise given in payment of a gambling debt is void The instrument is a negotiable instrument if it is negotiable in form even though it is absolutely void Also, an instrument that is negotiable in form is a negotiable instrument even though it is issued by a minor The instrument is voidable at the option of the minor if state law makes infancy a defense to a simple contract, but it is negotiable In Writing To be negotiable, an instrument must be in writing An instrument that is handwritten, typed, or printed is considered to be in writing [1–201(46)] The writing does not have to be on any particular material; all that is required is that the instrument be in writing A person could create a negotiable instrument in pencil on a piece of wrapping paper It would be poor business practice to so, but the instrument would meet the statutory requirement that it be in writing Signed To qualify as a negotiable instrument, an instrument in the form of a note must be signed by the person undertaking to pay (the maker) and an instrument in the form of a draft must be signed by the person giving the instruction to pay (the drawer) [3–103] An instrument has been signed if the maker or drawer has put a name or other symbol on it with the intention of validating it [3–401(b)] Normally, the maker or drawer signs an instrument by writing his name on it; however, this is not required A person or company may authorize an agent to sign instruments for it A typed or rubber-stamped signature is sufficient if it was put on the instrument to validate it A person who cannot write her name might make an X or some other symbol and have it witnessed by someone else In the Interbank of New York case, which follows, the court considered whether preauthorized checks containing the notation “verbally authorized by your depositor” met the requirement that an instrument must be “signed,” among other things, in order to qualify as a negotiable instrument mal77643_ch31.qxd 12/26/08 1:49 PM Page 813 www.downloadslide.com Chapter Thirty-One Negotiable Instruments 813 Interbank of New York v Fleet Bank 45 UCC Rep.2d 167 (New York Civ Ct 2001) Interbank of New York brought an action against Fleet Bank to recover on four drafts in the total sum of $3,361.25 paid out by Interbank from the account of its customer Dimittrous Tasoulis Two of the drafts were issued by and made payable to Sprint PCS, and two were issued by and made payable to Atlantic Mobile, Inc The drafts are known commonly in the banking industry as preauthorized drafts or “telechecks.” The drafts are created when a consumer has agreed to pay for goods or services by allowing a vendor to prepare and issue a preauthorized check drawn on the consumer’s account at the consumer’s designated financial institution The consumer provides the vendor with the necessary account number and bank at which it is maintained, and the vendor then issues a check drawn on the consumer’s account In this case, Sprint and Atlantic Mobile issued drafts on the account of Tasoulis to pay for telephone services The drafts contained the typed notation “verbally authorized by your depositor.” Bell and Atlantic Mobile deposited the drafts in their respective accounts at Fleet, and the drafts were ultimately paid by Interbank Thereafter, Tasoulis advised Interbank that he had never authorized Atlantic Mobile or Sprint to issue the drafts and executed affidavits to that effect as to each draft Interbank then sued Fleet Bank to recover the amount of the drafts Fleet took the position that the preauthorized checks should be treated like any other check and that in accordance with the UCC a depository bank such as Fleet could not be held liable for accepting a check on which the signature of the drawer is forged, unless it knew the signature was forged (this will be discussed in Chapter 33, Liability) Interbank took the position that a preauthorized check cannot be treated as an ordinary check and is not a negotiable instrument Edmead, Judge Section 3–104(a) of the UCC provides that for a writing to be a negotiable instrument it must be signed by the maker or drawer Interbank argues that since the subject drafts are not signed by the maker, but merely contain the notation “verbally authorized by your depositor,” the drafts not constitute negotiable instruments UCC section 1–201(3) provides that “signed” includes any symbol executed or adopted by a party with a present intention to authenticate a writing UCC section 3–401(2) provides that a signature is made by any word or mark used in lieu of a written signature In accordance with these sections of the UCC, if a drawer or maker intended the notation “verbally authorized by your depositor” to authenticate the checks and intended that the notation take the place of a written signature, then the check would be a negotiable instrument Clearly, if Tasoulis had authorized Atlantic Mobile to issue the check with the notation “verbally authorized by your depositor,” in place of his written signature, the check would qualify Unconditional Promise or Order Requirement of a Promise or Order If an instrument is promissory in nature, such as a note or a certificate of deposit, it must contain an unconditional promise to pay or it cannot be negotiable Merely acknowl- as a negotiable instrument The only infirmity in the subject drafts is that Tasoulis did not authorize their issuance Thus, the notation “verbally authorized by your depositor,” which could constitute a signature under the UCC, is unauthorized The unauthorized use of a stamped printed signature constitutes a forgery So too here the notation “verbally authorized by your depositor,” which can constitute a signature under the UCC, when unauthorized, constitutes a forged signature Accordingly, the preauthorized checks should be treated as any other check that contains a forged signature These preauthorized checks constitute negotiable instruments Summary judgment granted to Fleet Note: The case did not address the issue of whether Atlantic Mobile and Sprint would be liable to Interbank if they did not have the proper authorization from Tasoulis It should also be noted that this case was decided under the pre-1990 version of Articles and as New York has not adopted the 1990 Revision of Articles and However, the same result would be expected if it had adopted the Revised Articles edging a debt is not sufficient [3–103(9)] For example, the statement “I owe you $100” does not constitute a promise to pay An IOU in this form is not a negotiable instrument If an instrument is an order to pay, such as a check or a draft, it must contain an unconditional order A simple request to pay as a favor is not sufficient; however, a politely phrased demand, such as “please pay,” can meet the mal77643_ch31.qxd 12/26/08 1:49 PM Page 814 www.downloadslide.com 814 Part Seven Commercial Paper CYBERLAW IN ACTION E-Payments Compared to “Negotiable Instruments” Article has numerous requirements for the appearance and content of promises to pay (notes) and orders to pay (drafts/checks) if they are to qualify as negotiable instruments and be readily transferable Two of these requirements contemplate paper-based transactions—the requirement that promises to pay and orders to pay be “in writing” (see 3–103) and be “signed” (see 3–104) For this reason, at present, it would be difficult to “electrify” negotiable instruments successfully In contrast, e-payments—more commonly substitutes for traditional “check” payments—are neither in writing or “signed” by affixing a signature in ink to a sheet of paper Instead, the transaction is documented electronically—such as by sending an e-mail message or fax to a bank to direct them to pay a third-party seller of goods or services (such as the purchase of an online information product) requirement Checks commonly use the language “Pay to the order of.” This satisfies the requirement that the check contain an order to pay The order is the word “pay,” not the word “order.” The word “order” has another function—that of designating the instrument as payable “to order” or “to bearer” for purposes of negotiability Promise or Order Must Be Unconditional An instrument is not negotiable unless the promise or order is unconditional For example, a note that provides, “I promise to pay to the order of Karl Adams $100 if he replaces the roof on my garage,” is not negotiable because it is payable on a condition To be negotiable, an instrument must be written so that a person can tell from reading the instrument alone what the obligations of the parties are If a note contains the statement “Payment is subject to the terms of a mortgage dated November 20, 2010,” it is not negotiable To determine the rights of the parties on the note, one would have to examine another document—the mortgage However, a reference to another document for a statement of rights with respect to collateral, prepayment, or acceleration does not destroy the negotiability of a note [3–106(b)] For example, a note could contain this statement: “This note is secured by a mortgage dated August 30, 2010” without affecting its negotiability In this case, the mortgage does not affect rights and duties of The buyer and seller using e-payments have many of the same concerns as buyers and sellers using traditional payments methods: they want to be certain that they are dealing with each other honestly and that it will not be easier for the seller to double-charge the buyer’s account or to get away with taking payment but not delivering the goods or services that the buyer seeks from the transaction; and they want to guard against unscrupulous persons hacking into their records and stealing from either the buyer or seller Because of legal uncertainty about which body of law—federal consumer protection laws designed to govern credit-card payments or “electronic funds transfers” or state-created laws such as Articles and of the Uniform Commercial Code—will govern the transaction, the majority of consumers have continued to use traditional, paper-based payments methods and credit cards that they understand better than newer e-payments methods of payment For e-commerce to reach its fullest potential, more consumers will have to become comfortable with e-payments methods, in addition to better-known checks and credit cards the parties to the note It would not be necessary to examine the mortgage document to determine the rights of the parties to the note; the parties need only examine the note The negotiability of an instrument is not affected by a statement of the consideration for which the instrument was given or by a statement of the transaction that gave rise to the instrument For example, a negotiable instrument may state that it was given in payment of last month’s rent or that it was given in payment of the purchase price of goods The statement does not affect the negotiability of the instrument A check may reference the account to be debited without making the check conditional and thus nonnegotiable For example, a check could contain the notation, “payroll account” or “petty cash.” Similarly, the account number that appears on personal checks does not make the instrument payable only out of a specific fund Under original Article 3, a check (other than a governmental check) that stated that it was payable only out of a specific fund or account was treated as a conditional order and thus was not negotiable Revised Article changed this rule so that limiting payment to a particular fund or source does not make the promise or order conditional [3–106(b)] Revised Article also addresses the negotiability of traveler’s checks that commonly require, as a condition to payment, a countersignature of a person whose mal77643_index.qxd 1/13/09 1:40 PM Page I-41 www.downloadslide.com Index audit engagements, 1162 audit requirements, 1184 breach of trust, 1165 conflicts of interest, 1176–1179 fraud, 1164–1165, 1170 general performance standard, 1159–1160 injunctions against, 1183 internal control report, 1184 liability to clients, 1160–1165 criminal, 1180–1183 limiting by incorporation and LLPs, 1179–1180 to third persons, 1165–1176 misrepresentation, negligent, 1166–1170 negligence, 1166–1170 opinion letter, 1180 professional-client privilege, 1185 unaudited statements, 1180 working papers, 1185 Securities regulation definition of “security,” 1116–1117 disclosure scheme, 1115 federal regulation; see Securities Act of 1933; Securities Act of 1934 historical background, 1115 purpose, 1115 rights of action, 1165 state regulation, 1152–1153 Security agreement future advances, 744 nature of, 742 Security deposits, 647–648 Security devices, 719–720 Security interest after-acquired property, 744 agency powers given as, termination of, 908–909 artisan’s and mechanic’s liens, priority rule for, 758 attachment of, 742 buyer in ordinary course of business, priority rule for, 758 deed of trust, 732 definition, 741 financing statement, 744–747 fixtures, 616–617, 751 inventory, priority rule for interest in, 753–756 land contracts, 732 mortgage, 728–730 noninventory collateral, priority rule for interest in, 756–757 perfection of, 744–752 personal property, 720 priority rules, 752–761 proceeds from collateral, 744 purchase money security interest; see Purchase money security interest real property, 616–617, 720, 727–732 types of collateral, 741 SEC v Texas Gulf Sulphur Co., 1141 Sedima, S.P.R.L v Imrex Co., 161 See, Justice, 447 Seigel v Merrill Lynch, Pierce, Fenner & Smith, Inc., 873–875 Self-incrimination, privilege against, 148–149 Self-proving affidavit, 678 Selya, Circuit Judge, 336 Sentencing federal guidelines, 127–128, 158 state approaches, 126 Sentencing Reform Act of 1984, 127–128 Separation of powers, 2, 56–57 Service marks, 264 Service of summons, 39 Settlement (ADR), 49 Settlor, 679 Sex (gender) discrimination based on, 1327–1328 Equal Protection Clause and, 75 Shannon v The State, 593 Shares and shareholders action without meeting, 1084 annual meeting, 1083 bona fide purchaser of shares, 1041 buy-and-sell agreement for share sales, 1041 capital surplus, 1039 class actions suits, 1099–1100 close corporation transfers of shares, 1042, 1044 control block of shares, sale of, 1103–1104 corporate debts, liability for, 1103 defense of corporation by, 1103 demand on directors, 1100–1101 derivative actions, 1100–1103 directors of corporation; see Board of directors discount shares, 1039 disqualified purchasers of shares, 1042 dissenters’ rights, 1089–1090 distributions to, 1096–1099 dividends, 1096–1099 double derivative suit, 1100 election of directors, 1050–1052, 1084–1087 exchanges of shares, compulsory, 1088 expenses of litigation, 1102–1103 fair value, 1039 fiduciaries, shareholders as, 1104–1105 freezing out minority shareholders, 1071, 1104 illegal distributions, liability for, 1103 individual lawsuits, 1099 information, right to, 1095 inspection right, 1095 issuance of shares, 1040 lawsuits, 1099–1100 liability of shareholders, 1103–1107 litigation committee, 1101 meetings, 1083–1084 I-41 mal77643_index.qxd 1/13/09 1:40 PM Page I-42 www.downloadslide.com I-42 Shares and shareholders—Cont nonprofit corporations, rights and duties, 1107–1108 oppression of minority shareholders, 1071, 1104 option agreements, 1041 par value, 1039 postincorporation subscription, 1040 preemptive right, 1095–1096 preincorporation subscription, 1029, 1040 private acquisition of controlling block of shares, 1151–1152 procedural requirements, 1089 proposals in proxy statement, 1140 quality of consideration, 1038 quantity of consideration, 1038–1040 real value, 1038 repurchase of shares, 1099 resales, 1039–1040 restrictions on transfers of shares, 1041–1042 return on investment, 1099 reverse splitting of shares, 1098–1099 right of first refusal, 1041 rights, 1038 share dividend, 1098 share subscription, 1040 splitting of shares, 1098–1099 tender offer, 1151–1153 transfer of shares, 1040–1042 types of shares, 1036–1037, 1085 voting agreements, 1085 warrants, 1038 watered shares, 1039 Shelley v Kraemer, 63 Shelter Mutual Insurance Co v Maples, 698–699 Shelter rule, 834 Sherman Act FTC authority, 1227 jurisdiction, 1256 Noerr-Pennington doctrine, 1308 Section 1, restraints of trade, 1257–1273 Section 2, monopolization, 1273–1282 standing, 1257 types of cases, 1256 Shlensky v Wrigley, 1057 Shop right doctrine, 248 Short-form merger, 1089 Shrinkwrap contracts or licensees, 294, 315 Sigler v Patrick, 27–28 Signature requirement, 412 e-signatures, 423 negotiable instruments, 812, 850–851 Statute of Frauds, 420 Silberman, Circuit Judge, 1197 Simo v Mitsubishi Motors North America, Inc., 518–520 Simultaneous death, 677–678 Index Sixth Amendment, 127–128 general information, 153–154 jury trial, right to, 127–128 Skebba v Kasch, 354–356 Skill-of-prudent-person standard, 1159 Slander defined, 181 Slippery slope fallacy in ethical decisions, 114 Smalkin, District Judge, 848 Small offering exemptions, 1126–1127 Smith, Adam, 97, 1257 Smith, Judge, 1366 SmithStearn Yachts, Inc v Gyrographic Communications, inc., 1028–1029 Smith v Carter & Burgess, Inc., 455–456 Smith v City of Jackson, 1331 Smith v Van Gorkom, 1057 Social Security, 1320 Sociological jurisprudence, 10–11 Sole proprietor defined, 932 Sole proprietorship, nature of, 932–933 Solid waste disposal, 1364 Solitude, intrusion on, 191 Solvency test, dividends, 1098 Souter, Justice David, 21, 75, 82, 146, 150, 250, 256, 1217, 1240 Southex Exhibitions, Inc v Rhode Island Builders Association, Inc., 941–942 Sovereign compulsion doctrine, 1311 Sovereign immunity, 1311 Sowell, Thomas, 97 Sparks, Associate Justice, 841 Special agent, 899 Special charters, 1009 Special damages breach of contract, 470 slander and libel, 181 Specialized federal courts, 36 Special masters (ADR), 53 Special verdict, 47 Specific performance as remedy, 5, 416, 473, 582 Specific restitution as remedy, 474 Spector v Konover, 955–956 Spending power of Congress, 63 Spendthrift trust, 681–683 Splitting of shares, 1098–1099 Spoliation of evidence, 3–5 Stahlecker v Ford Motor Co., 228–231 Stakeholder theory of corporate responsibility, 92 Stale checks, 871 Standard Bent Glass Corporation v Glassrobots Oy, 330–331 Standard Oil Co v United States, 1288 Standards, environmental ambient air control, 1347 automobile pollution, 1351–1352 water quality, 1356 mal77643_index.qxd 1/13/09 1:40 PM Page I-43 www.downloadslide.com Index Standby underwriting, 1119 Standing to sue, 23, 1209 Stapleton, Circuit Judge, 1309 Stare decisis, 3, 12, 58 Star-Shadow Productions, Inc v Super Sync Sound System, 570–571 State courts jurisdiction, 29–34 Stated capital account, 1039 Statement of Denial, 956 Statement of Partnership Authority, 956 State of Connecticut v Cardwell, 488–489 State of New York v Burger, 1205 State Oil Co v Khan, 1261–1263 States ambient air quality standards, 1347 antitrust exemption for state action, 1307–1308 employment discrimination laws, 1333–1334 enforcement of air quality standards, 1351 independent checks applicable only to, 81–82 regulatory powers, 58 securities laws, 1152–1153, 1176 tender offers, regulation of, 1152–1153 waste disposal, 1361 water pollution control, 1355–1356 Statue of Liberty–Ellis Island Commemorative Coin Act, 323 Statute of Frauds applicability, 413–420 easements and, 620 e-signatures and, 423, 485 history of, 413 insurance contracts, 692 marriage as consideration, 419–420 memorandum requirements, 420–421 one-year rule, 416–418 payment of decedent’s debt, 418–419 promissory estoppel and, 425 purposes of, 413 requirements, 420–425 sale of goods for $500 or more, 418 signature requirement, 420 Statutes, generally, constitutional restrictions, 58–59 federal regulatory power, 58–59 state regulatory power, 58 Statutes of limitations debt payment as contracts consideration, 356 discharge of contracts by, 468 product liability, 526 remedies for breach of sales contract, 571 Rule 10b-5 liability, 1149 Section 11 liability, 1134–1135 Statutory interpretation, 15–24 Statutory liens, 724 Statutory strict liability, 236 I-43 Staub, Circuit Judge, 275 Steadman, Associate Judge, 874 Stephens v Pillen, 196–198 Stevens, Justice John Paul, 60, 75, 85, 86, 146, 243, 250, 634, 1210, 1353 Stock options, 102–103 Stone, Associate Justice, 889 Stone, Christopher, 102 Stoneridge Investment Partners, LLC v Scientific-Atlanta, Inc., 1146–1149, 1175 Stoshak v East Baton Rouge Parish School Board, 174–175 Straight voting, 1050, 1084 Strict foreclosure, 729 Strict liability defined, 170 generally, 234 Section 402A, Restatement (Second) of Torts, 517–518 Strict performance standard, 459 Stroupes v The Finish Line, Inc., 379–380 Subagent, 899 Subassignee, 440 Subcontractors, rights of, 732–733 Subdivision laws, 636–637 Subject matter jurisdiction, 30 Subleases, 659, 660 Subpoenas, administrative agency, 1203 Subrogation right nature of, 723 property insurance, 701 Substantial evidence test, 1215–1216 Substantial performance standard, 459–460 Substantive law, Substantive unconscionability, 404 Substitutionary restitution as remedy for breach of contract, 474 Summary judgment, 45 Summary jury trial (ADR), 52–53 Summons, 39 Sunk cost fallacy in ethical decisions, 114–115 Superfund, 1364–1367 Supervening illegality and contract performance, 467 Supremacy, federal, Supreme Court commercial speech, test for, 65–67 Constitution, role with respect to, 57–58 jurisdiction, 37 means-end test, 64–65 Surety, 720–723 Suretyship and guaranty, 720–723 Surrender of lease, 660 Survivorship, right of, 618 Suspect classes, 74–79 Sutton v United Airlines, 1333 Swiney, Judge, 1035 Syllogistic reasoning, 12 Sylva Shops Limited Partnership v Hibbard, 661–663 mal77643_index.qxd 1/13/09 4:04 PM Page I-44 www.downloadslide.com I-44 T Taft-Hartley Act, 1322 Takings Clause eminent domain, 84, 633 just compensation, 85 land use regulation, 638–640 public purpose, 85–86 public use, 85 rent cap provision, 639–640 scope, 84–86 Tampa Electric Co v Nashville Coal Co., 1289 Tang, Circuit Judge, 1290 Tangible personal property, 589 Tariff Act of 1930, 266 Taxes Congress, taxing power of, 62–63 foreign corporations, 1014 limited liability company, 986 limited partnership, 993–994 Tax sale, acquisition of real property by, 623 TBG Insurance Services Corp v Superior Court, 1336–1338 Telecommunications Act of 1996, 1215 Telemarketing Do-Not-Call Registry, 1232–1236 Telemarketing and Consumer Fraud and Abuse Prevention Act, 1231–1232 Telemarketing Sales Rule, 1231–1232 Teleological ethical theories, 93 Teller’s check, 811 Tempur-Pedic International, Inc v Waste to Charity, Inc., 490–492 Tenancies in common, 617–618 by the entirety, 618 at sufferance, 646 for a term, 646 types of, 646, 647 at will, 646 for years, 646 Tenancy in partnership, 618 Tender offer regulation, 1151–1153 Termination agency relationship, 907–910 agent’s authority, effect on, 909–910 contract offer, 315–320 corporations, winding up and termination, 1110–1111 employment, 1338–1341 leases; see Leases partnerships, 975 registration of securities, 1136–1137 restrictive covenant, 623 trusts, 684 Termination statement, 745 Index Ternus, Justice, 521 Testamentary capacity, 668–669 Testamentary trust, 679 Theis, J., 363 A Theory of Justice (John Rawls), 95 The Wealth of Nations, 1257 The Work Connection, Inc v Universal Forest Products Co., 918–919 Thin capitalization, corporations, 1018 Third parties assignment of contracts, 435–441 beneficiaries, 446–449 contract beneficiaries, 446–449 delegation of contract duties, 441–445 express condition of contracts, 456 goods in possession of, 496 securities professionals’ liability to common law, 1165–1171 securities law, 1171–1176 termination of agency relationship, notice to, 910 title to goods, 490–492 Thomas, Justice Clarence, 75, 249 Thompson, Judge, 443 Thorne v Deas, 343 Thurman, U.S Bankruptcy Judge, 797 Time for performance of contracts, 487 Times-Picayune Co v United States, 1255 Time Warner Cable, Inc v DIRECTV, Inc., 280–283 Tippees, 1143–1146 Title documents, 605, 608 Title to goods buyers in ordinary course of business, 492 entrusting of goods, 492–493 identity of holder, 487–488 passage of, 487–488 third parties, 490–492 voidable, 490 Title to real property, 628–629 Title VII, 1964 Civil Rights Act, 1323–1334 Toal, Judge, 233 Tombstone ad, securities offering general information, 1121 sample ad, 1122 Torrens system of title assurance, 629 Tort immunity of landlords, 653 Tort law agent’s liability, 927 bad faith breach of contract, 708–709 civil liability, 170 commercial torts, 276–279 damages, 170–171 deceit, 361 definitions, 170 disclaimers of liability, 533 independent contractor’s liability, 926 mal77643_index.qxd 1/13/09 1:40 PM Page I-45 www.downloadslide.com Index Industrial Revolution’s effect on, 206 intent, 170 interference with personal rights, 173–196 interference with property rights, 196–198 joint and several liability, 927–928 landlord’s tort liability, 653–658 misrepresentation by agent, 926–927 negligence; see Negligence principal’s liability, 923–927 privity determinations, 527 recklessness, 170 reform of tort law liability insurance and, 706, 708 negligence and, 236–237 securities law rights of action, 1165 securities professionals’ tort liability, 1161–1165 standard of proof, 170 strict liability, 170 suits against principal and agent, 927–928 Total fairness test of freeze-out, 1071 Totten trusts, 680 Toxic substances: air pollutants, 1347–1348 Toyota Manufacturing Co v Williams, 1333 Trade fixtures, 615 Trademark Counterfeiting Act of 1984, 266 Trademarks, 263–273 definition, 263 dilution, 266–267 distinctiveness, 264–265 infringement, 266 licensing use of, 265 registration, 265 term of protection, 265 transfer of rights, 265 Trade regulation rules, FTC, 1226 Trade secrets, 273–276 Trading on inside information, 1072–1073 Trading partnership, 957–958 Tradition, appeals in ethical decisions to, 114 Transaction exemptions, 1124–1129 Transactions in ordinary course of business: Chapter 7, 777–778 Transfer of interests, partnerships, 947–948, 997 Transferred intent: battery, 173–174 Transfer warranties, 854, 857–858 Traxler, Circuit Judge, 519 Treadwell v J.D Construction Co., 920–921 Treasurer of corporation, 1054 Treasure trove, 591–593 Treasury shares, 1037 Treaties, Treble damages, 1257 Trentadue v Gorton, 6–8 Trepanier v Bankers Life & Casualty Co., 909 I-45 Trespass to land duty owed to trespasser, 214–215 generally, 196 Trial courts, 29–30 Trials generally, 45–47 jury trials, 47 speedy trial, right to, 153–154 Tricontinental Industries, Ltd v PricewaterhouseCoopers, LLP, 1167–1170 Trustees allocating principal and income, 681 Chapter bankruptcy, 772–773 definition of, 679 liabilities of, 681 powers and duties, 680–681 U.S Trustee, 773 Trusts asset protection trusts, 779 charitable trusts, 680 constructive trusts, 684 creation, requirements for, 680 cy pres doctrine, 680 definition of, 679 express trusts, creation of, 680 implied trusts, 684 income beneficiary, 681 inter vivos trust, 679 modification, 684 purpose of, 679–680 remaindermen, 681 resulting trusts, 684 spendthrift trust, 681–683 termination, 684 testamentary trust, 679 Totten trusts, 680 Truth in Lending Act, 1237–1239 Twenty-first Amendment, 88–89 Twenty-sixth Amendment, 380 Tying agreements, 1268–1272, 1288 U Ultramares Corp v Touche, 1166, 1170 Ultra vires doctrine, 1048–1049 Unaudited statements, 1180 Unconscionable contracts, 299, 369, 403 Unconscionable disclaimers, 533 Underground storage tanks, regulation of, 1361 Underwriting, securities, 1119–1120 Undisclosed principal, 920 Undue influence, in contracts, 374 Unemployment compensation, 1320 Unenforceable contracts, 295, 392–409 Unfair competition (Lanham Act), 280–283 Unfair persuasion, in contracts, 374 mal77643_index.qxd 1/13/09 1:40 PM Page I-46 www.downloadslide.com I-46 Uniform acts, Uniform Commercial Code acceptance of contract, 328–330 Article 9, 740–765 assignment, 436–437, 439 commercial impracticability and contract performance, 467 definiteness of contract terms, 311 delegation of duties, 442 discharge of liability, negotiable instruments, 863–864 disclaimers of implied warranty, 532–533 drawee’s liability, 847–848 drawer-drawee relationship, 869–878 express warranties, 506–508 fitness, implied warranty of, 512–514 fund transfers, 890 general contract requirements, 295–296, 298–300 holder in due course personal defenses, 837–838 leases, 483, 593 limitation of remedies, 533 mailbox rule, 333–334 memorandum in contracts, 420 merchantability, implied warranty of, 508–509 merchants, 483 modification of contract, 351 negotiable instruments, 807, 831–832 negotiation, 822–823 no-privity defense, 527–528 origin and purpose, 295–296 parol evidence rule, 426 privity, 528–531 risk of loss, 493–496 sale of goods; see Sales contracts sales contracts, 421–425 security interest, 740–765 shares, issuance of, 1040 shelter rule, 834 software and other information contracts, 296 stop payment orders, 874 text of, Appendix B-1–B-154 unauthorized signatures, 877–878 unconscionability of contract, 403 Uniform Computer Information Transactions Act (UCITA), 296 Uniform Electronic Transactions Act (UETA), 423, 549 Uniform Limited Liability Company Act of 1996, Revised (RULLCA), 985–986 Uniform Limited Partnership Acts (ULPA), 993 Uniform Probate Code (UPC), 667 Uniform Simultaneous Death Act, 677–678 Uniform Transfers to Minors Act, 597 Unilateral contracts acceptance, 334 general information, 294–295 power to revoke contract offer, 316 Unilateral mistakes, 369 Index Unilateral refusals to deal, 1260–1261 Union Labor Life Insurance Co v Pireno, 1307 Union Planters Bank, N.A v Rogers, 878–879 Unions, 1321–1322 Unissued status of shares, 1037 United Housing Foundation Inc v Forman, 1116–1117 United Mine Workers v Pennington, 1308 U.S Trustee, 773 United States v Aluminum Co of America, Inc., 1255, 1275 United States v Booker, 127–128, 158 United States v Chiarella, 1143 United States v Dean, 1361–1362 United States v Doe, 153 United States v Domenic Lombardi Realty, 1365–1367 United States v E I du Pont de Nemours and Co., 1274 United States v General Electric Company, 1311 United States v Grinnell Corp., 1273 United States v Hall, 139–140 United States v Hopkins, 1356–1358 United States v Jensen, 1075–1078 United States v Microsoft Corp., 1275–1280, 1281 United States v Morton Salt, 1203 United States v Natelli, 1181–1182 United States v Ohio Edison Company, 1348–1350 United States v Park, 156, 157 United States v Philadelphia National Bank, 1292 United States v Place, 140 United States v Santos, 128–131 United States v Socony-Vacuum Oil, 1259 United States v Topco Associates, Inc., 1267 United States v Twombly, 133 United States v U.S Gypsum Co., 1256 United States v Williams, 66, 132 Universal City Studios, Inc v Corley, 254 Unjust dismissal, 1338 Unjust enrichment, 301 Unliquidated debts, 352 Unocal Corp v Mesa Petroleum Co., 1063 Unowned property, 590 Unsecured credit, 719 Untrue assertion of fact, 361–362 Usage of trade, 547 USA PATRIOT Act, 147–148 Utilitarianism ethical business practices, 108 generally, 96–97 V Vaidik, Judge, 319 Valley Bank of Ronan v Hughes, 882–885 Valued policies, property insurance, 699–700 Variances from zoning rules, 636 Vaught, Judge, 1341 Veasey, Chief Justice, 1052 mal77643_index.qxd 1/13/09 1:40 PM Page I-47 www.downloadslide.com Index Venue general information, 33 requirements, 30 Verdicts, 47 Vertical boycotts, 1268 Vertical mergers, 1296 Vertical price-fixing, 1260–1267 Vertical restraints on distribution, 1267–1268 Vice president of corporation, 1054 Victory Clothing Co., Inc v Wachovia Bank, N.A., 860–863 Vining v Enterprise Financial Group, Inc., 709–712 Violence Against Women Act, 88 Virginia v Moore, 143 Vogel, Justice, 1337 Vogel, Presiding Judge, 574 Voidable contracts, 295 Void contracts, 295 Voir dire, 45 Voluntary dissolution, 1109 Volvo Trucks North America, Inc v Reeder-Simco GMC, Inc., 1302–1305 Voting for board of directors, 1050–1052, 1107–1108 Voting rights, preferred shares, 1037 Voting trusts, 1085 W Waddell v L.V.R.V Inc., 554–555 Wagering contracts, 692 Wagner Act, 1321–1322 Waiver benefit of law, negotiable instruments, 818 discharge of contract by, 468 excuse of conditions, 457 failure to object creating, 549–550 liens, 737 restrictive covenants, 623 Walker, Chief Judge, 690 Waller, Presiding Justice, 878 Wall Street rule, 1051 Walters, Chief United States Magistrate Judge, 548 Warehouse receipts, 605 Warner-Jenkinson Co v Hilton Davis Chemical Co., 248 Warnick v Warnick, 979–981 Warnings inadequate, 521 negligent failure to provide, 514–515 Warranties advertisements, 507 assignor’s liability in contracts, 441 authority, implied warranty of, 922–923 basis-of-the-bargain requirement, 507 disclaimers, 532–533 document of title, 609 express warranties, 506–508 fitness, implied warranty of, 512–514 FTC authority, 1236–1237 habitability, implied warranty of, 629–630 information requirements, 1236–1237 insurance policies, 692 merchantability, implied warranty of, 508–509 multiple express warranties, 507 negotiable instruments, 854–858 no-privity defense, 527–528 possession, implied warranty of, 648 quiet enjoyment, implied warranty of, 648 sales talk, 506–507 statements of value or opinion, 506–507 Warrant requirement (Fourth Amendment), 143 Warrants (securities), 1038 Warranty deeds, 627–628 Warsaw Convention, 606 Washington, Chief Judge, 466 Waste, tenant’s duty not to commit, 659 Watered shares, 1039 Water pollution, 1355–1358 Watts v Simpson, 443–444 Webb-Pomerene Act, 1307 Weil v Murray, 553–554 Weinberger v UOP, 1090 Wetlands, protection of, 1358 Whistleblowing, 158, 1338 White-collar crimes bribery, 159–160 corporate criminal liability, 155–156 deferred prosecution agreements, 158–159 early approaches, 154–155 fraudulent acts, 159 future directions, 157–159 gratuities, illegal, 159–160 liability of individuals, 156–157 mail fraud, 1183 mens rea, 154 nature of, 154 problems with individual liability, 156–157 problems with punishing corporations, 155–156 regulatory offenses, 159 respondeat superior doctrine, 154 RICO, 160–163, 1183 securities law, 1180–1183 tax law violations, 1182 Whitman v American Trucking Associations, 1199–1201 Williams Act, 1151 Wills acquisition of personal property by, 597 acquisition of real property by, 623 advance directives, 673–675 codicils, 673 construction of, 670 durable form of attorney for health care, 675 I-47 mal77643_index.qxd 1/13/09 1:40 PM Page I-48 www.downloadslide.com I-48 Wills—Cont durable power of attorney, 674–675 execution of, 669 extrinsic documents, 669 form of living will declaration, 674 holographic wills, 670 incorporation by reference, 669 joint wills, 670 limitation on disposition by, 672–673 living wills, 673–674 mutual wills, 670 noncupative wills, 669 pretermitted children, 673 revocation, 673 right of disposition by, 667–668 simultaneous death, 677–678 surviving spouse, 673 terminology, 668 testamentary capacity, 668–669 Wilner, Judge, 1020 Winding up; see Dissolution and winding up Windows, Inc v Jordan Panel Systems Corp., 494–495 Wineries, out-of-state shipment by, 88–89 Wintersport Ltd v Millionaire.com, Inc., 414–415 Wire transfers, 889–890 Index Workers’ compensation, 701, 705, 1316–1319 Working papers, ownership of, 1185 Work product material, 41–43 Works for hire, 253 World Trade Center Properties, LLC v Hartford Fire Insurance Co., 689–691 World Trade Organization, 268 Wright, Justice, 558 Wright v Brooke Group Limited, 521–524 Writing requirement insurance contracts, 692 negotiable instruments, 812 sales contracts, 418 Statute of Frauds; see Statute of Frauds Writ of execution, 48 Wrongful discharge, 1338 Y Yeadon Fabric Domes, Inc v Maine Sports Complex, LLC, 759–761 Young v Weaver, 384–385 Z Zapata Corp v Maldonado, 1101–1102 Zoning laws, 636–637 mal77643_index.qxd 1/13/09 1:40 PM Page I-49 www.downloadslide.com mal77643_index.qxd 1/13/09 1:40 PM Page I-50 www.downloadslide.com mal77643_index.qxd 1/13/09 1:40 PM Page I-51 www.downloadslide.com mal77643_index.qxd 1/13/09 1:40 PM Page I-52 www.downloadslide.com mal77643_index.qxd 1/13/09 1:40 PM Page I-53 www.downloadslide.com mal77643_index.qxd 1/13/09 1:40 PM Page I-54 www.downloadslide.com mal77643_endsheet.qxd 1/15/09 11:25 PM Page www.downloadslide.com Get the most your Business course Get theout mostofout of your BusinessLaw Law course The Student Study Guide ISBN 13: 978-007-3361796 ISBN 10: 0073361798 is available to help you study for tests and improve your understanding in this course The study guide provides you with comprehensive chapter outlines, exercises for reviewing important terminology, critical thinking questions, and sample questions (with answers) to reinforce important concepts in the chapter It also includes a detailed course outline to help you understand the bigger picture of how the Business Law topics in your course are related These materials included for each of the chapters are a great resource for review and exam preparation The Online Learning Center (www.mhhe.com/mallor14e) is a one- stop shop for materials that will enchance your business law course It includes chpater quizzes, professional resources and links to helpful material, a career center, news feeds related to Business Law topics, a SpanishEnglish legal terms glossary, access to the online articles of the Uniform Commercial Code, PowerPoint files, and critical thinking questions You Be the Judge Online video segments, which include 18 hypothetical business law cases All of the cases are based on real cases from our Business Law texts Each case allows you to watch interviews of the plaintiff and defendant before the courtroom argument, see the courtroom proceedings, view relevant evidence, read other actual cases relating to the issues in the case, and then create your own ruling After your verdict is generated, view what an actual judge ruled (unscripted) in the case and then get the chance to defend or change your ruling Uniform Commercial Code Returning for this edition, the most recent versions of Articles 2, 2A, 3, 4, 7, and are included in Appendix B of the text to help you understand commercial transactions This set of statutes designed to govern most commercial transactions helps clarify often misunderstood business and legal terms and equips you with knowledge to prepare these types of contracts ISBN: 0073377643 Author: Mallor/Barnes/Bowers/Langvardt Title: Business Law: The Ethical, Global, And E-Commerce Environment, 14e Back Endsheet Color: 4c Pages: 2, ... the condition has been fulfilled [3 20 6(b)] mal77643_ch 32. qxd 12/ 26/08 1:51 PM Page 828 www.downloadslide.com 828 Part Seven Commercial Paper The Global Business Environment Convention on International... and cannot be a holder in due course A person who pays mal77643_ch 32. qxd 12/ 26/08 1: 52 PM Page 8 32 www.downloadslide.com 8 32 Part Seven Commercial Paper too little for an instrument, perhaps because... government checks commonly require the payee’s signature mal77643_ch 32. qxd 12/ 26/08 1:51 PM Page 824 www.downloadslide.com 824 Part Seven Commercial Paper The revision to Article and the conforming