Syllabus – amazon.com/author/quizmaster

Contracts Outline (Skript)

This is our Contracts outline (Skript) as or word (548k) or pdf (334k
Alternative contracts outline (Skript) here (Calamari is very famous!)

Another contracts script is here.

Our Case reader part 1.
Oure case reader: part 2.

We will do these cases, and in this order:
Ryno v. Tyra Zivich v. Mentor Sutton v. Warner Doherty v. Doherty Insurance Agency, Inc. Parker v. 20th Century Fox C & H v. Sun Ship O’Neill v. Gallant Hadley v. Baxendale Sharick v. SE University of the Health Sciences Super Valu Stores v. Peterson Union Carbide v. Oscar Mayer Foods Miller v. Newsweek Joc Oil v. Con Edison Co.

Hamer v. Sidway

Lucy v. Zehmer

MacPherson v. Buick Motor Co.

Webster v. Blue Ship Tea Room, Inc.

Williams v. Walker-Thomas Furniture Co.

We will do them in that order.

SPECIAL CONTRACTS

Covenants not to compete & non-disclosure clauses:

http://jebachelder.com/articles/991029.html

http://contracts.onecle.com/shufflemaster/yoseloff.noncomp.2002.05.01.shtml

Confidentiality agreements:
http://www.ipwatchdog.com/tradesecret/simple-confidentiality-agreement/

Sharkey contract clauses:

http://www.expertlaw.com/library/business/contract_clauses.html

More on Mistake – in fact; in law. -unilateral; mutual.
http://www.gerryarmstrong.org/50grand/legal/a7/appeal/mistake-of-law.html

Commercial Paper – Handelspapiere

http://ks.findacase.com/research/wfrmDocViewer.aspx/xq/fac.19760508_0042113.KS.htm/qx

Summary:

1. Negotiable Instrument:

For a writing to be a negotiable instrument under Article 3 UCC the following requirements must be met:

a. The promise or order to pay must be unconditional;

b. The payment must be a specific sum of money, although interest may be added to the sum;

c. The payment must be made on demand or at a definite time;

d. The instrument must not require the person promising payment to perform any act other than paying the money specified;

e. The instrument must be payable to bearer or to order.

f. Promise must be in writing

2. holder in due course

a. one holding a check or promissory note,

b. received for value (he/she paid for it),

c. in good faith, and with

d. no notice of defenses to payment such as

i. note is no good,

ii. claimed by another,

iii. overdue, or

iv. previously dishonored (a bank had refused to pay since the account was overdrawn).

Such a holder is entitled to payment by the maker of the check or note. The maker may only raise real defenses, not personal defenses, to their debt due.

3. Real Defense

a. is a justification for a maker or drawer not to honor a negotiable instrument even if it has been transferred to a holder in due course (or “HDC”) because it makes the instrument “void” according to Uniform Commercial Code §3-305

i. Fraud inducing obligor to sign instrument without a reasonable opportunity to learn of its fraudulent character or essential terms (also known as “(fraud in the factum”); this depends upon consideration of “all relevant factors”;

ii. forgery of a necessary signature;

iii. adjudicated insanity which renders the instrument void;

iv. material alteration of the instrument, such as the amount;

v. infancy which renders the instrument voidable or void;

vi. illegality which renders the instrument void;

vii. duress at the time of making the instrument;

viii. discharge of obligor in insolvency proceedings, or any discharge known to the HDC;

ix. a suretyship defense, such as the holder knew an indorser was signing as a surety or accommodation party;

x. statute of limitation (generally 3 years after dishonor of a draft or 6 years after demand or other due date on a note).

4. Personal Defense

a. Personal Defenses arise in the course of the life of the instrument emanating from the conduct or circumstances surrounding its ACQUISITION by a party thereto.

i. Breach of Contract

ii. No consideration

iii. Duress

iv. Insanity

And now in detail:

1. Negotiable instruments

a. Creation

i. Criteria for negotiability

1. In writing for a promise or order

a. Writing is defined as “intentional reduction to tangible form” — electronic might not be good yet

b. Promise is defined as a direct commitment to pay (party that makes is the maker”)

i. Instrument that has a promise is a note

c. Order is defined as something directing someone else to pay

d. Types of drafts

i. Checks (on banks)

ii. Cashier’s checks (drawer and drawee are the same bank)

iii. teller’s checks (draft drawn by one bank on another)

2. Unconditional

a. No conditions (or merchandise) or reference to other documents

b. Exceptions

i. Can make reference to collateral or security agreement

ii. Can have a instrument that states that something is recourse or non-recourse

iii. Designation of a specific funds doens’t undermine negotiability

3. Must require payment of money (no services) — commodities ok, and foreign currency

4. Amount of the obligation be fixed:: can be fixed or variable amounts of rates

5. Must be made payable to order or to bearer

a. To order

i. revised article (in NY) doesn’t care if the words “to order” are scratched out on check

ii. if it says “to order” it is bearer paper

b. bearer

6. Payable on demand or at a definite time

a. Demand is the same as at sight

b. Can be systemic limitations

c. Possibilities of embedded options

i. Holder can be given the option to extend

ii.

7. No extraneous undertakings

a. Cannot be a combination of commodities and money

b. Exceptions

i. Maintenance of collateral

ii. Can have a authorization of the holder to confess judgment or realize on or dispose of collateral

iii. Can have waiver of rights

ii. Example: draft bought by buyer, addressed to an intermediary bank. (notification by telex) Draft is mailed, and later presented to intermediary bank

1. Party that directs payment is drawer (e. g. buyer’s bank)

2. Intermediary is drawee

3. Payee (usually seller)

4. Remitter — buyer

b. Transferring

i. Holder must possess, and have a right to enforce

1. Bearer paper: With bearer paper, possession is the first last and only question — thieves can be holders

a. Bearer paper can be indorsed to order paper

2. Order paper: must be payable to an identified person–that person is the only one who can be a holder

a. Transfer of possession is done through – endorsement (must unambiguously indicate that the instrument is an endorsement)

b. Types of endorsements

i. Special endorsements: person to whom it is to be paid

1. Still order paper.

ii. Blank: doesn’t indicate person – changes order paper to bearer paper

iii. Restrictive: — if not complied with than conversion, unless proceeds applied according to intention of endorser

1. Invalid for most kinds of condition precedent

2. Valid “for deposit” or “for collection”

iv. Accommodation

1. They become the guarantor of the endorsement, like a standard guarantor

ii. Holder in due course

1. Invalid for consumer credit transactions — consumer notes are technically instruments, but are not negotiable

a. Bearer bonds are no longer deductable

b. Today estoppel certificates can be issued

2. Must obtain by valid transfer

a. if the transfer is invalid then it is not a holder and thus not a holder in due course.

3. Must take for value: consideration is required. A promised future performance is not value

4. Must take in good faith: honesty in fact and observance of reasonable business standards

a. Some courts look to close connection between the parties and their standards of dealings

5. Must be no constructive notice: people can’t protect themselves from problems by hiding behind the HOLDER IN DUE COURSE statute

a. Specific problems that knowledge would have to be shown

i. Instrument is overdue

1. Checks have a 90 day limit

2. an instrument payable at any time something becomes overdue

ii. Dishonored

iii. default

iv. forgery or alternation

v. third party has claims on it

vi. one of the obligors has a claim that would limt or bar enforcement of the instrument by the original payee

6. remedies for holder in due course – holder can sue any party on the dishonor

a. holder in due course may enforce the instrument even if the underlying contract was breached

i. only defenses

1. infancy

2. duress

3. lack of legal competency

4. illegality

5. inducement by bribery

a. laws vitiate holder in due course status only if they render obligations “entirely null and void”

6. fraud in the making (e. g. switched papers) – people must take precautions

ii. discharge in insolvency proceedings is a defence to holder in due course

iii. payment:

1. discharge of one party doesn’t let the others off the hook

2. accomodation party might be discharged if a holder grants extenion of due date

iv. discharge

1. holder in due course status is not precluded by just notice of discharge (other than extension of due date), but if one takes a not with notice of partial discharge or valid defence that this is valid against them

2. discharge is effective against a person that takes with notice of the discharge

3. discharge would not be binding on a holder in due course that took without knowledge of the discharge

4. discharge parties might want to destroy note

5. real estate: payment by a borrower to a party that it things is a holder is valid even if that party has transferred

6. property: payment is valid only if it is made to a person entitled to enforce the instrument at the time of payment

b. drawer

c. endorser

7. remedies for a holder not in due course (e. g. no payment of value)

a. obligor can impose defenses, any original claim

b. no remedies unless endorsement

i. checks don’t need to be indorsed for a bank to get the check

ii. banks usually use chargebacks

iii. today there is a secondary market for debt –e. g. CMOs

c. shelter: purchasers that fails to obtain HOLDER IN DUE COURSE status can assert any holder in due course rights that the seller had before the sale — e. g. people who take for no value can assert rights of prior holder

iii. remedies on underlying obligation

1. near-cash certified checks, cashier’s checks, teller’s checks –

a. bank has liability

b. underlying obligation is discharged upon receipt

2. ordinary instruments

a. suspension of obligation until dishonor or payment

b. can sue on check or underlying obligations

UNIFORM COMMERCIAL CODE
I was asked to do a lecture on the UCC, which is Not my area of specialty, not at all.

This is the text of the UCC
http://www.law.cornell.edu/ucc/ucc.table.html

here is the case’s brief.
http://www.casebriefs.com/blog/law/commercial-law/commercial-law-keyed-to-warren/negotiability-and-holders-in-due-course/kaw-valley-state-bank-trust-co-v-riddle/

Read these through, focusing on vocabulary which you do not know. The central concept is the: “holder in due course”

http://legal-dictionary.thefreedictionary.com/Holder+in+Due+Course
http://en.wikipedia.org/wiki/Holder_in_due_course
http://en.wikipedia.org/wiki/Uniform_Commercial_Code

And the main question is when, and whether, a secured or unsecured creditor may enforce their claim.

http://www.flashcardexchange.com/study

http://ebookbrowse.com/barbri-outline-ny-2005-secured-transactions-commercial-paper-pdf-d86409422

http://picjur.files.wordpress.com/2010/03/botf2-12.jpg