Commercial Law- Smalkin- Spring 2010 1/12/2010-
Real defenses- HDC
There is NOT a partial holder*, just a partial holder in due course
Holder in due course is there for the protection of the remote taker- (payee could be but rare- almost never)
Must checks are UNACCEPTED checks- 99.99% checks are unaccepted!!!!
Basically, you have NO Obligation UNTIL the check has been dishonored-
When it is dishonored- then you MUST pay it- to a Holder or one who has holdership rights-
Ex: if you go to store and sign paycheck and it bounces- ***your signature on the instrument incurs liability**** THIS DOES NOT MATTER IF NOTE OR DRAFT
**The loss will always rest with the person who is solvent highest up the
Chain
Indorser’s liability evaporates if the check does NOT get into the banking channels within 30 days
A Bank is protected if the depositor forgot to indorse- by magic rule- BUT not if previous holder did not indorse- Holder by the Operation of Law 4-205
Foreign checks- there is no provisional settlement- this is a COLLECTION- this is sent overseas- you are charged several fees to be sent through the European bank
Cashier’s check is NOT money because it was not released by the government-drawor, draws on itself
Demand or Time instrument???
Negotiability determined at the outset and NOT subsequent activities-
It can say On demand, at sight or NOTHING, but it can NOT be a botched time instrument-
Items that do destroy negoitability-
Intangible, not written??
Express conditions-
“subject to or governed by”-
“Rights or obligations with respect to the note or draft are stated in another writing”- (this provides baggage for the instrument-
$ amount must be fixed-
“Three years AFTER I graudate from law school- NOT FIXED-
“Two years after Uncle dies”- NOT FIXED (even though certain to happen)
BUT the birthday of a dead person- would be negotiable- ann. Like Washington Day!!!
Indefinite payment if paying obligation back.
ORDER MUST BE PRESENT for promissory note- Checks, if crossed out, still OK- under last UCC revision-
A Failed order instrument does NOT become a Bearar instrument- it just becomes NON-negotiable-
items that do not destroy negotiability-
Oral conditions on deliver of instrument-
Post-dated checks-
Negotiability determined at the outset and NOT subsequent activities-
By a reference to another writing for a statement of rights with respect to: This is considered a RULE of convenience- PAC (baggage)
1) collateral
2) prepayment- obligor pays ahead of time
3) acceleration- the person who holds the note wants payment
ahead of time-
Payment is limited to resort to particular fund or source-
Foreign currency payments-
rule now is variable interest rates ARE negotiable as long as it applies to some ascertainable rate-)
Reasonable attorney’s fees, unspecified fees for paying collection fees- court costs
Person who makes option- can make it indefinite
“When counter signed below” and thus is negotiable (the requirement of counter signature is OK)
Certificate of Deposit- This is NON negotiable
As soon as you see bankruptcy or sheriff- you think PERFECTION ISSUE**** EXAM******
***Perfection by filing (this is good for everything but title), possession, title certficate or automatic perfection
Financing statement is good for five years-
Article 4 deals with CHECKS-
Article 3 deals with ALL negoitiable instruments-
Article 4- Payor bank = Drawee bank
TIME REQUIREMENTS
90 days- for notice to HDC- if overdue-
30 days- Indorsers liability- 30 days after the indorsment- indorsers liability is discharged unless it gets in the flow of commerce within 30 days-
6 months- Bank does NOT have to pay a check that is more than 6 months old- No wrongful discredit- you do not get a recredit unless there is bad faith
Promissory notes, checks, and notes, we will talk about debit cards, ACH… but is governed by federal law-
(* There is NOT a partial holder*, just a partial holder in due course-) instrument is paid to the order of more than on
IX- for the secured finance of personal property
UCC Article III, IV, IX change the most with the most revisions- but are pretty much uniform throughout the states-
P. 37- of the UCC book-
Maryland Articles of Commerical Law code are called: Titles- however practictioners refer to each section as “Articles” and will be referred to as articles throughout this class-
Article I is the general provisions article, general applicability to all of the other articles-
1-102- Generally applied and liberally construed to underlying policies and purposes- (not literal construction)
Official comments are NOT legislative history because they were never adopted- however they are useful because they provide answers to questions- [EXAM](in MD, leg. History is NOT written anywhere)- Ct. of Appeals may go with what they say occassionally or just ignore them entirely-
PARSED 1-103
1-103- statute will take precedence over common law of state of Maryland-
Need “finger tip feeling” for how the law operates- das fingersplintfuhl
Difference between law and equity in 1-103- in this state, there is not a different court for either in MD.- DE, and NJ have different courts-
Remedies are different for either court- Writ for courts of C/L- if there was NOT a writ for it, no recovery- particularly in ecclesiasical courts- deeds of trust, annulments- C/L remedy was awarding of $ judgment- jury is the fact finder
Equity arose b/c writs were not created for every action, instead equity courts can order litigants to do something- injunction- NO jury, but judge (contempt of court)-
