Negotiable Instruments and Other Payment Systems: Problems And Materials

, by Lewis, Wayne K.; Resnicoff, Steven H.

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ISBN: 9781583607909 | 1583607900
Cover: Hardcover
Copyright: 9/1/2004

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Supplemental Materials

Preface

xix

An Introduction to Negotiable Instruments Law

(8)

Historical Evolution of the Uniform Commercial Code

(1)

Structure of the UCC

(1)

The UCC's Treatment of Negotiable Instruments Law

(1)

Relevant Provisions From UCC Article 1

(1)

Relevant Non-UCC Law That Supercedes UCC Articles 3 and 4

(1)

Pitfalls in Analyzing UCC Provisions

(3)

Negotiability

(20)

Notes and Drafts --- Introductory Comments

(2)

Criteria of Negotiability

(11)

An Unconditional Order or Promise To Pay

(1)

What Is an Order?

(1)

What Is a Promise?

(1)

Orders or Promises Must Be Written and Signed

(1)

Problem 2.1

(1)

Problem 2.2

(1)

Problem 2.3

(1)

Problem 2.4

(1)

What is an ``Unconditional'' Order or Promise?

(1)

Problem 2.5

(1)

Other Exceptions to the Requirement That the Promise Must be Unconditional

(1)

Fixed Amount of Money with or Without Interest or Other Charges

(1)

Rules Regarding Interest

(1)

Problem 2.6

(1)

Payable ``in Money''

(1)

Payable to Order or to Bearer

(1)

Problem 2.7

(1)

Problem 2.8

(1)

Payable on Demand or at a Definite Time

(1)

Problem 2.9

(1)

No Other Promise, Order, Obligation, or Power Given by the Maker or Drawer Except as Authorized by Article 3

(1)

Problem 2.10

(1)

Terms Waiving Statutory Protections

(1)

Permissible Terms Provided by Other Sections

(1)

Drafts and Notes: A More Detailed Look

(5)

Documentary Drafts

(1)

Checks

(1)

Certified Checks

(1)

Cashier's Checks

(1)

Teller's Checks

(1)

Traveler's Checks

(1)

Certificates of Deposit

(1)

Negotiable Orders of Withdrawal

(1)

Consequences of Non-negotiability

(2)

The Life of an Instrument

(18)

Issue of an Instrument

(1)

Problem 3.1

(1)

Transfers

(4)

Negotiation of Bearer Paper --- Change of Possession Alone

(1)

Problem 3.2

(1)

Negotiation of Order Paper --- Indorsement Plus Change of Possession

(1)

Blank and Special Indorsements

(1)

Problem 3.3

(1)

Problem 3.4

(1)

Restrictive and Non-Restrictive Indorsements

(8)

Restrictions on Further Transfer

(1)

Conditional Indorsements

(1)

``For Collection'' or ``For Deposit'' Indorsements

(2)

State Of Qatar v. First American Bank Of Virginia

(4)

Notes

(1)

Trust Indorsements

(1)

Qualified Indorsements

(1)

More About Indorsements

(3)

Location

(1)

Deviation of Indorsement from That Called For

(1)

Multiple Payees (§ 3-110(d))

(1)

Problem 3.5

(1)

Depositary Banks No Longer Need To Supply Missing Indorsements

(1)

Parties Entitled to Enforce an Instrument

(6)

A Holder --- Generally

(2)

Problem 4.1

(1)

Problem 4.2

(1)

Other Parties Entitled to Enforce

(1)

A ``Nonholder in Possession of the Instrument Who Has the Rights of a Holder''

(1)

Problem 4.3

(1)

Problem 4.4

(1)

A ``Person Not in Possession of the Instrument Who Is Entitled To Enforce the Instrument Pursuant to § 3-309 or § 3-418(d)''

(2)

Owners Without Possession Cannot Enforce

(1)

Problem 4.5

(1)

Persons in Wrongful Possession May Enforce

(1)

Liability on an Instrument

(20)

Underlying Obligation --- Effect of Taking an Instrument

(2)

Problem 5.1

(1)

Problem 5.2

(1)

Problem 5.3

(1)

Problem 5.4

(1)

Liability on the Instrument Generally

(1)

Parties' Obligations

(1)

Maker's Obligation

(1)

Problem 5.5

(1)

Multiple Makers

(1)

Problem 5.6

(1)

Drawer of a Cashier's Check or a Draft Drawn on the Drawer

(1)

Indorser's Obligation

(1)

Problem 5.7

(1)

Multiple Indorsers

(2)

Problem 5.8

(2)

Avoidance or Discharge of Indorser's Liability

(1)

Problem 5.9

(1)

Drawer's Obligation

(1)

Problem 5.10

(1)

Acceptor's Obligation

(1)

Problem 5.11

(1)

Technical Rights

(1)

Presentment

(1)

Purposes of Presentment: Payment and Acceptance

(2)

Problem 5.12

(1)

How To Make Presentment

(1)

When To Make Presentment

(1)

Problem 5.13

(1)

Excuse of Presentment

(1)

Consequences of Improper or Untimely Presentment

(1)

Problem 5.14

(1)

Problem 5.15

(1)

Dishonor and Notice of Dishonor

(1)

Dishonor

(2)

Promissory notes

(1)

Drafts

(1)

Problem 5.16

(1)

Problem 5.17

(1)

Problem 5.18

(1)

Problem 5.19

(1)

Notice of Dishonor

(4)

How notice of dishonor may be given

(1)

When to make notice of dishonor

(1)

Problem 5.20

(1)

Excuse of Notice of Dishonor

(1)

Consequences of failure to give prompt notice of dishonor

(2)

Liability on an Instrument Signed by an Agent

(8)

A Principal's Liability on an Instrument Signed by an Agent

(1)

Problem 6.1

(1)

An Agent's Personal Liability on the Instrument

(3)

When the Agent's Signature Was Unauthorized

(1)

Problem 6.2

(1)

Problem 6.3

(1)

Problem 6.4

(1)

When the Agent's Signature Was Authorized

(1)

Problem 6.5

(1)

What Constitutes a Showing of Representative Capacity?

(1)

Extrinsic Evidence

(2)

Miscellaneous Considerations

(1)

Accommodation Parties

(8)

Problem 7.1

(1)

Guarantors

(1)

Problem 7.2

(1)

Problem 7.3

(1)

Rights Against the Accommodated Party

(1)

Right of Reimbursement --- § 3-419(e)

(2)

Problem 7.4

(1)

Problem 7.5

(1)

Common Law and Equitable Rights of Sureties

(1)

Proving One's Accommodation Party Status

(3)

Problem 7.6

(3)

A Defendant's Responses to a Suit to Enforce an Instrument

(26)

Your Client Has a Specified Article 3 Defense, a Contract Law Defense or a Claim in Recoupment

(10)

Defenses

(1)

Problem 8.1

(1)

Problem 8.2

(1)

Problem 8.3

(1)

Infancy

(1)

Problem 8.4

(1)

Duress, Lack of Legal Capacity, Illegality

(1)

Duress

(1)

Problem 8.5

(1)

Lack of Legal Capacity

(1)

Illegality

(1)

Fraud in the Factum

(1)

Problem 8.6

(1)

Problem 8.7

(1)

Problem 8.8

(1)

Insolvency Discharge of Debt

(1)

Claims in Recoupment

(1)

Your Client's Liability Has Been Discharged

100

(13)

Payment

100

(1)

Problem 8.9

101

(1)

Problem 8.10

101

(1)

Problem 8.11

102

(1)

Problem 8.12

102

(1)

The 2002 Revision Approach

102

(1)

Problem 8.13

103

(1)

``Payment'' with a different instrument

103

(1)

Problem 8.14

103

(1)

Cancellation or Renunciation

103

(1)

Problem 8.15

104

(1)

Discharge on Refusal of Tender of Payment

104

(1)

Problem 8.16

104

(1)

Section 3-605 Provisions

105

(1)

Problem 8.17

105

(1)

Problem 8.18

106

(1)

Problem 8.19

107

(1)

Problem 8.20

107

(1)

The Rules Under Revised 2002 § 3-605

108

(1)

Problem 8.21

109

(1)

Discharge Due to Late Presentment or Notice of Dishonor

110

(1)

Discharge on an Accepted Draft (Including Certified Check)

110

(1)

Problem 8.22

111

(1)

Discharge Due to a Fraudulent Alteration

111

(1)

Generally

111

(1)

Problem 8.23

112

(1)

Exceptions

112

(1)

Problem 8.24

112

(1)

Your Client May Be Able to Assert a Third Person's Claim to the Instrument, Claim in Recoupment, Defense or Discharge

113

(2)

Problem 8.25

113

(1)

Problem 8.26

113

(1)

Problem 8.27

113

(1)

Problem 8.28

114

(1)

The Holder in Due Course Doctrine

115

(30)

Acquiring Holder in Due Course Status

115

(1)

Holder in Due Course Requirements Generally (§ 3-302)

116

(1)

The Requirements

116

(1)

The Instrument Must Be Negotiable

116

(1)

The Individual Must Be a Holder

116

(1)

The Instrument Must Not on Its Face Be of Questionable Authenticity

117

(1)

The Instrument Must Be Taken for Value

117

(1)

An Executory Promise Is Usually Not Value

117

(1)

Problem 9.1

118

(1)

Problem 9.2

118

(1)

An Irrevocable Commitment to a Third Party Is Value

118

(1)

Problem 9.3

118

(1)

Discounted Notes and Partial Performance

119

(1)

Problem 9.4

119

(1)

Acquiring a Security Interest or Lien Is Value

119

(3)

Problem 9.5

120

(1)

Problem 9.6

121

(1)

Antecedent Debts Constitute Value

122

(1)

Problem 9.7

122

(1)

Negotiable Instruments Are Value

122

(1)

The Instrument Must Be Taken in Good Faith

122

(2)

Maine Family Federal Credit Union v. Sun Life Assurance Company of Canada et al.

124

(9)

Problem 9.8

133

(1)

The Instrument Must Be Taken Without Notice

133

(1)

Facts That Preclude Holder in Due Course Status

134

(1)

Problem 9.9

134

(1)

What Constitutes ``Notice'' of These Facts

134

(1)

Time at Which To Determine Whether There Is Notice

135

(1)

Problem 9.10

136

(1)

Specific Statutory Notice Provisions

136

(2)

Notice of Breach of Fiduciary Duty

136

(1)

Problem 9.11

136

(1)

Notice of a Discharge Is Not Notice of a Defense

137

(1)

Problem 9.12

137

(1)

Public Filing Does Not Constitute Notice

138

(1)

Can the Payee Be a Holder in Due Course?

138

(1)

The Holder in Due Course Doctrine in Consumer Transactions

138

(1)

The FTC Holder in Due Course Rule

139

(2)

Problem 9.13

140

(1)

Effect of Revised 2002 § 3-305(e)

141

(1)

State Consumer Protection Statutes

142

(1)

The Shelter Doctrine

142

(3)

Problem 9.14

143

(1)

Problem 9.15

144

(1)

Warranty Liability

145

(16)

Transfer Warranties

145

(6)

Step 1: Who Makes Transfer Warranties?

146

(1)

Problem 10.1

146

(1)

Problem 10.2

147

(1)

Step 2: To Whom are Transfer Warranties Made?

147

(1)

Problem 10.3

147

(1)

Steps 3 & 4: What are the Transfer Warranties and What Constitutes a Breach?

148

(1)

Problem 10.4

149

(1)

Problem 10.5

149

(1)

Problem 10.6

149

(1)

Revised 2002 §§ 3-416 and 4-207

150

(1)

Steps 5 & 6: Was there Proximate Cause and, if so, How Much May the Transferee Recover?

150

(1)

Problem 10.7

151

(1)

Comparing Section 3-416 and Section 4-207

151

(1)

Problem 10.8

151

(1)

Presentment Warranties

152

(4)

Presentments of an Unaccepted Draft to the Drawee

153

(1)

Revised 2002 §§ 3-417 and 4-208

154

(1)

Problem 10.9

154

(1)

Problem 10.10

154

(1)

Presentment of Dishonored Drafts and Other Instruments

155

(1)

Problem 10.11

155

(1)

Problem 10.12

156

(1)

Problem 10.13

156

(1)

Remedies for Breach of Warranties

156

(5)

Problem 10.14

157

(2)

Problem 10.15

159

(2)

Conversion Liability

161

(10)

What Constitutes Conversion?

161

(5)

``Law Applicable to Conversion of Personal Property''

161

(1)

Problem 11.1

162

(1)

Taking an Instrument by Transfer, but Not by Negotiation, from a non-PETE

162

(1)

Problem 11.2

162

(1)

Problem 11.3

162

(1)

Problem 11.4

163

(1)

Banks Obtaining Payment for a Non-Pete

163

(1)

Problem 11.5

163

(1)

Problem 11.6

164

(1)

Banks Paying Instruments to a non-PETE

164

(1)

Problem 11.7

164

(1)

Problem 11.8

165

(1)

Problem 11.9

165

(1)

Non-Compliance with Restrictive Indorsements

165

(1)

Problem 11.10

166

(1)

Who May Sue for Conversion

166

(2)

Issuers may not sue for conversion

166

(1)

Problem 11.11

166

(1)

Payee and Indorsees May Only Sue for Conversion After Delivery

167

(1)

Problem 11.12

167

(1)

Problem 11.13

168

(1)

Problem 11.14

168

(1)

Who May Be Sued for Conversion

168

(1)

Measure of Damages

169

(2)

The Bank-Customer Relationship

171

(10)

Agency Relationship

171

(1)

What is ``Properly Payable''?

171

(4)

Problem 12.1

172

(1)

Authorized Drawer's Signature

172

(1)

Problem 12.2

172

(1)

Payment to a ``Person Entitled To Enforce''

173

(1)

Problem 12.3

173

(1)

Problem 12.4

173

(1)

Problem 12.5

174

(1)

Alterations

174

(1)

Payment on or After Any Stated Date

174

(1)

Problem 12.6

175

(1)

Stop Payment Orders

175

(1)

Bank's Right To Charge for Items Not Properly Payable

175

(6)

Section 4-401(d)

176

(1)

Problem 12.7

176

(1)

Problem 12.8

176

(1)

Section 3-407

176

(1)

Problem 12.9

177

(1)

Section 4-403(c)

177

(1)

Problem 12.10

177

(1)

Section 4-404

177

(1)

Section 4-405

178

(1)

Problem 12.11

178

(1)

Section 4-407

178

(1)

Problem 12.12

178

(1)

Problem 12.13

179

(1)

Section 1-103

179

(2)

Stop Payment Orders

181

(18)

On What Types of Items May Payment Be Stopped

181

(6)

Generally --- Checks and Notes

181

(1)

Money Orders

182

(1)

Non-Bank Drafts

182

(1)

Payment Cannot Be Stopped on a Certified Check

183

(1)

Payment Cannot Be Stopped on a Cashier's Check

183

(1)

Teller's Checks

184

(1)

Bank's Refusal to Pay Certified, Cashier's or Teller's Checks

184

(2)

Problem 13.1

186

(1)

Problem 13.2

186

(1)

Problem 13.3

186

(1)

Who May Stop Payment or Close an Account

187

(1)

How May Payment Be Stopped or an Account Closed

187

(9)

Stopping Payment of an Item

187

(1)

Rovell v. American National Bank

188

(6)

Problem 13.4

194

(1)

Agreement Affecting Stop Payment Order Requirements

195

(1)

Problem 13.5

195

(1)

Closing of an Account

196

(1)

For How Long May Payment Be Stopped or an Account Closed

196

(1)

Remedies for Failure to Comply with Stop Payment/Close Order

196

(3)

In General

196

(1)

Defenses Banks May Assert

196

(1)

Problem 13.6

197

(1)

Problem 13.7

197

(1)

Problem 13.8

198

(1)

Wrongful Dishonor

199

(8)

When is Dishonor of an Item ``Wrongful''?

199

(3)

Dishonor of an Item

199

(1)

Problem 14.1

200

(1)

Problem 14.2

200

(1)

A Properly Payable Item

201

(1)

Sufficient Funds in the Customer's Account

201

(1)

Justified Dishonors

201

(1)

To Whom is a Bank Liable for Wrongful Dishonor?

202

(1)

Problem 14.3

202

(1)

For What Sorts of Damages is a Bank Liable?

203

(4)

Problem 14.4

204

(3)

Bank Collection

207

(14)

Collection through the Federal Reserve System: An Example

208

(1)

Terminology

208

(1)

More Terminology

208

(1)

Question One: When, and under what circumstances, will any of the banks become irrevocably liable as to a deposited check?

209

(1)

Collecting Banks: Forward Collection

209

(1)

Still more Terminology

210

(1)

The Payor Bank: Accountability upon ``Final Payment''

210

(2)

The Payor Bank: Obligations under the EFAA

212

(1)

Terminology, again

213

(1)

Returning Banks: Obligations under the EFAA

214

(1)

Question Two: How Soon are Deposited Funds Available to the Depositor?

214

(4)

Rule #1: The first business day after the banking day of deposit

215

(1)

Scenario #1: The depositary bank and the payor bank are the same bank

215

(1)

Problem 15.1

215

(1)

Scenario #2: The check is a certain type of check

215

(1)

Scenario #3: The first $100 of any check

216

(1)

Rule #2: The second and third banking days after deposit

216

(1)

Terminology (still more)

216

(1)

Problem 15.2

217

(1)

Rule #3: The fifth and sixth banking days after deposit

217

(1)

Problem 15.3

217

(1)

Important Exceptions

218

(1)

Civil Liability for Violations

218

(1)

Question Three: Assume that a payor bank dishonors a check and returns it to the despositary bank. Under what situations can the depositary bank obtain reimbursement from its customer?

219

(2)

Special Problems: Forgeries and Missing Signatures

221

(10)

Missing & Unauthorized Makers' and Drawers' Signatures

221

(5)

Problem 16.1

222

(1)

Problem 16.2

222

(1)

Problem 16.3

222

(1)

Drawee's Rights Under Section 3-418

223

(1)

Problem 16.4

223

(1)

Drawee's Right to Pursue Violations of Presentment Warranties

224

(1)

Problem 16.5

224

(1)

Drawee's Rights Against the Party Who Forged the Drawer's Signature

225

(1)

Missing or Forged Necessary Indorsements

226

(5)

The rights of makers and drawers

226

(1)

Problem 16.6

227

(1)

Problem 16.7

227

(1)

The Drawee's Rights

227

(1)

Problem 16.8

228

(1)

The Rights of the Party in Possession of the Instrument

228

(1)

Problem 16.9

228

(1)

Problem 16.10

228

(1)

The Rights of the Payee Whose Purported Indorsement Is Unauthorized

229

(1)

Problem 16.11

229

(2)

Unauthorized Signatures and Alterations Treated as if They Were Authorized

231

(18)

Prior Agreement or Subsequent Ratification

231

(1)

Preclusions

232

(11)

Section 3-406

232

(1)

Problem 17.1

233

(1)

What Constitutes Negligence That Substantially Contributes to a False Signature or Alteration?

233

(1)

Problem 17.2

234

(1)

What Constitutes Negligence in the Taking or Paying of Instruments?

235

(1)

Problem 17.3

236

(1)

Section 4-406

236

(1)

Duty to Inspect Statements and Report Certain Irregularities

237

(1)

Problem 17.4

237

(1)

Problem 17.5

238

(1)

Failing to Fulfill this Duty

238

(1)

Problem 17.6

238

(1)

Repeated Wrongdoing by the Same Perpetrator

239

(1)

Problem 17.7

239

(1)

Exceptions to the General Rules

240

(2)

Problem 17.8

242

(1)

Problem 17.9

242

(1)

Code Provisions That Make Unauthorized Indorsements Effective

243

(6)

Section 3-404

243

(1)

Problem 17.10

243

(1)

Problem 17.11

244

(1)

Problem 17.12

244

(1)

Problem 17.13

245

(1)

Problem 17.14

245

(1)

§ 3-405

246

(1)

Problem 17.15

246

(3)

Consumer Electronic Fund Transfers

249

(18)

Problem 18.1

250

(1)

Problem 18.2

250

(1)

Problem 18.3

250

(1)

Problem 18.4

251

(1)

Problem 18.5

251

(1)

Problem 18.6

251

(1)

Point-of-sale Transfers/Debit Cards

251

(13)

The Mechanics of Point-of-Purchase/Debit Card Transaction

252

(2)

Creation of the Cardholder/Issuer Relationship

254

(1)

Issuer's Liability for Failing to Make a Funds Transfer

254

(1)

Cardholder's Liability for Unauthorized Transfers

255

(2)

Problem 18.7

257

(1)

Problem 18.8

257

(1)

Problem 18.9

257

(1)

Kruser v. Bank of America NT&SA

257

(6)

Error Resolution

263

(1)

Automated Teller Machines

264

(1)

Direct Deposits or Withdrawals of Funds

264

(3)

Commercial Electronic Fund Transfers

267

(18)

Problem 19.1

268

(1)

How Wire Transfers Are Accomplished

268

(1)

A Simple Case

268

(5)

Step One

268

(1)

Step Two

269

(1)

Step Three

270

(1)

Problem 19.2

271

(1)

Problem 19.3

272

(1)

Problem 19.4

272

(1)

Problem 19.5

272

(1)

A Slightly More Complicated Case

273

(1)

Variations and Permutations

273

(1)

Transfers Via FedWire

274

(1)

Errors and Other Mishaps in Funds Transfers

274

(1)

A Receiving Bank's Liability for Improper Execution of a Payment Order

274

(2)

Moody Nat. Bank v. Texas City Development Ltd., Co.

276

(4)

Payment Order Discrepancies Between the Account Number and the Beneficiary's Name

280

(1)

Other Originating Bank Errors

281

(1)

Unauthorized Payment Orders

282

(3)

Credit Cards

285

(20)

Evolution of Credit Cards

285

(6)

Elements of a Consumer Credit Card Transaction

286

(1)

The Simple Case

287

(1)

Figure 20-1

287

(1)

Benefits to Participants

288

(1)

The More Complicated Case

289

(1)

Figure 20-2

290

(1)

Benefits to Participants

291

(1)

Basic Applicable Law: the Truth in Lending Act

291

(1)

Principal Issues

292

(13)

Formation of the cardholder-issuer relationship

292

(1)

Problem 20.1

293

(1)

Problem 20.2

293

(1)

Problem 20.3

293

(1)

Problem 20.4

294

(1)

The Cardholder's Right to Assert Against the Issuer Underlying Claims and Defenses

294

(1)

Problem 20.5

295

(1)

Problem 20.6

295

(1)

Problem 20.7

296

(1)

The cardholder's liability for unauthorized charges

296

(1)

Draiman v. American Express Travel Related Services Company

297

(4)

Problem 20.8

301

(1)

Problem 20.9

301

(1)

Problem 20.10

301

(1)

Resolution of Billing Errors

301

(4)

Appendix 1 Glossary

305

(16)

Appendix 2 Taking an Instrument as Accord and Satisfaction

321

(4)

Appendix 3 Plaintiff-Defendant Table

325

(2)

Appendix 4 Pre-2002 Revision § 3-605

327

(10)

Appendix 5 Jurisdictions That have Adopted the 1990 Revisions to Articles 3 & 4

337

Table of Cases

(1)

Index

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Negotiable Instruments and Other Payment Systems: Problems And Materials

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