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.
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.
Tea Room, Inc.
Co.
We will do them in that order.
SPECIAL CONTRACTS
Confidentiality agreements:
http://www.ipwatchdog.com/tradesecret/simple-confidentiality-agreement/
More on Mistake – in fact; in law. -unilateral; mutual.
http://www.gerryarmstrong.org/50grand/legal/a7/appeal/mistake-of-law.html
Commercial Paper – Handelspapiere
Summary:
be a negotiable instrument under Article 3 UCC the following requirements must
be met:
The promise or order to pay must be
unconditional;
The payment must be a specific sum of money, although
interest may be added to the sum;
The payment must be made on demand or at a definite time;
The instrument must not require the
person promising payment to perform any act other than paying the money
specified;
The instrument must be payable to bearer or to order.
Promise must be in writing
holder in due course
one holding a check or promissory
note,
received for value (he/she paid for
it),
in good faith, and with
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).
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.
Real Defense
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).
Personal Defense
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
Negotiable instruments
Creation
i.
Criteria for negotiability
In writing for a promise or order
Writing is defined as
“intentional reduction to tangible form” — electronic might not be
good yet
Promise is defined as a direct
commitment to pay (party that makes is the maker”)
i.
Instrument that has a promise is a
note
Order is defined as something
directing someone else to pay
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)
Unconditional
No conditions (or merchandise) or
reference to other documents
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
Must require payment of money (no
services) — commodities ok, and foreign currency
Amount of the obligation be fixed::
can be fixed or variable amounts of rates
Must be made payable to order or to
bearer
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
bearer
Payable on demand or at a definite
time
Demand is the same as at sight
Can be systemic limitations
Possibilities of embedded options
i.
Holder can be given the option to
extend
ii.
No extraneous undertakings
Cannot be a combination of
commodities and money
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
Party that directs payment is
drawer (e. g. buyer’s bank)
Intermediary is drawee
Payee (usually seller)
Remitter — buyer
Transferring
i.
Holder must possess, and have a
right to enforce
Bearer paper: With bearer paper,
possession is the first last and only question — thieves can be holders
Bearer paper can be indorsed to
order paper
Order paper: must be payable to an
identified person–that person is the only one who can be a holder
Transfer of possession is done through
– endorsement (must unambiguously indicate that the instrument is an
endorsement)
Types of endorsements
i.
Special endorsements: person to
whom it is to be paid
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
Invalid for most kinds of condition
precedent
Valid “for deposit” or
“for collection”
iv.
Accommodation
They become the guarantor of the
endorsement, like a standard guarantor
ii.
Holder in due course
Invalid for consumer credit
transactions — consumer notes are technically instruments, but are not
negotiable
Bearer bonds are no longer
deductable
Today estoppel certificates can be
issued
Must obtain by valid transfer
if the transfer is invalid then it
is not a holder and thus not a holder in due course.
Must take for value: consideration is
required. A promised future performance is not value
Must take in good faith: honesty in
fact and observance of reasonable business standards
Some courts look to close
connection between the parties and their standards of dealings
Must be no constructive notice:
people can’t protect themselves from problems by hiding behind the HOLDER IN
DUE COURSE statute
Specific problems that knowledge
would have to be shown
i.
Instrument is overdue
Checks have a 90 day limit
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
remedies for holder in due course –
holder can sue any party on the dishonor
holder in due course may enforce the
instrument even if the underlying contract was breached
i.
only defenses
infancy
duress
lack of legal competency
illegality
inducement by bribery
laws vitiate holder in due course
status only if they render obligations “entirely null and void”
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:
discharge of one party doesn’t let
the others off the hook
accomodation party might be
discharged if a holder grants extenion of due date
iv.
discharge
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
discharge is effective against a
person that takes with notice of the discharge
discharge would not be binding on a
holder in due course that took without knowledge of the discharge
discharge parties might want to
destroy note
real estate: payment by a borrower
to a party that it things is a holder is valid even if that party has
transferred
property: payment is valid only if
it is made to a person entitled to enforce the instrument at the time of payment
drawer
endorser
remedies for a holder not in due course (e. g. no payment of
value)
obligor can impose defenses, any
original claim
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
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
near-cash certified checks,
cashier’s checks, teller’s checks –
bank has liability
underlying obligation is discharged
upon receipt
ordinary instruments
suspension of obligation until
dishonor or payment
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.
http://www.law.cornell.edu/ucc/ucc.table.html
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/
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