Uniform Commercial Code
Authors:
White, James J. / Summers, Robert S.
Edition:
6th
Copyright Date:
2010
51 chapters
have results for Principles of sales law
Chapter 8. Seller’s Remedies 353 results (showing 5 best matches)
- In the case of the sale of goods, this principle has inspired the standard formulas under which a buyer’s or seller’s damages are based on the difference between the contract price and the market price on that market where the injured party could have arranged a substitute transaction for the purchase or sale of similar goods.
- The statutory history begins with the Joint Editorial Committee of the American Law Institute and the National Conference of Commissioners on Uniform State Laws. Their product was a revision of the Uniform Sales Act and became the proposed draft of the Uniform Revised Sales Act (Sales Article of the proposed Commercial Code). Section 110 of the Uniform Revised Sales Act reads as follows:
- Even if the courts accept seller’s argument that the pay option does not involve the sale of goods, specific performance must still pass muster under common law requirements. See e.g., Restatement Second on Contracts § 359 (remedy at law must be inadequate).
- When the seller does resell, he may resell privately or at a public sale. The Code nowhere defines public sale. It is clear enough that an auction sale open to the public is a public sale, but what of a nonauction to which the public may come or an auction sale (such as a dealer’s used car auction) from which some of the public is excluded? Comment 4 to 2–706 states that “[b]y ‘public’ sale is meant a sale by auction,” but the courts have yet to work out the precise dividing line between public and private resales. We would classify most sales open only to a limited segment of the public, such as dealer auctions, as public sales on the theory that competitive forces are usually at work at such sales similar to those usually at work at public sales to which all of the public is invited.
- “Lost volume” occurs when the seller resells to a buyer who would have bought from the seller even if there had been no breach of the original contract. The result is the seller’s total volume of sales by year’s end is reduced by one, and the seller’s damages are the profit the seller would have made on that additional sale. For a more detailed discussion, see Harris, A Radical Restatement of the Law of Seller’s Damages: Sales Act and Commercial Code Results Compared, 18 Stan. L. Rev. 66, 80–87 (1965).
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Chapter 1. 2001 Revision of Article 1 149 results (showing 5 best matches)
- While the primary focus of revised 1–103 is on the relationship between the UCC and principles of common law and equity as developed by the courts, the Drafting Committee recognized that state law is increasingly statutory, and not only are there a growing number of state statutes addressing specific issues that come within the scope of the UCC, but in some states many general principles of common law and equity have also been codified. Thus, Comment 3 to 1–103 makes it clear that the principles of 1–103(b) remain relevant to the analysis of the relationship between a state statute and the UCC when the statute relates to a matter within the scope of the UCC. More specifically, the mere fact that an equitable principle is stated in statutory form rather than in judicial decisions should not change the analysis of whether the principle can be used to supplement the UCC under 1–103(b).
- Unless displaced by the particular provisions of , the principles of law and equity, including the law merchant and the law relative to capacity to contract, principal and agent, estoppel, fraud, misrepresentation, duress, coercion, mistake, bankruptcy,
- Revised 1–103 combines subsections (1) and (2) of pre-revision 1–102 (concerning the underlying purposes and policies of the UCC) with pre-revision 1–103 (concerning the applicability of supplemental principles of law). The provisions have been combined in this section to reflect the relationship between the UCC’s purposes and policies and the extent to which other law is available to supplement the UCC.
- Both pre-revision 1–103 and revised 1–103(b) provide that the principles of law and equity that may supplement the UCC provisions include “the law merchant and the law relative to capacity to contract, principal and agent, estoppel, fraud, misrepresentation, duress, coercion, mistake, bankruptcy, or other validating or invalidating cause.” Comment 4 to revised 1–103 follows Comment 3 to pre-revision 1–103 in confirming that the list of sources of supplemental law in 1–103(b) is intended merely to be illustrative and is not exhaustive.
- 1–103. Construction of [Uniform Commercial Code] to Promote its Purposes and Policies; Applicability of Supplemental Principles of Law.
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Chapter 9. Buyer’s Rejection or Revocation of Acceptance, and Seller’s Right to Cure 224 results (showing 5 best matches)
- As of May 28, 2009, seventy-four nations including the U.S., are parties to the U.N. Convention on International Sale of Goods (CISG), which, in the absence of contract terms to the contrary, governs sales between these participating countries. For example, CISG articles 34, 37, and 48 specify the seller’s right to cure, which varies only slightly from the seller’s right under the Uniform Code. See also Catherine Piché, The Convention on Contracts for the International Sale of Goods and the Uniform Commercial Code Remedies in Light of Remedial Principles Recognized Under U.S. Law: Are the Remedies of Granting Additional Time to the Defaulting Parties and of Reduction of Price Fair and Efficient Ones?, 28 N.C. J. Int’l L. & Com. Reg. 519 (2003); Eric C. Schneider, The Seller’s Right to Cure Under the Uniform Commercial Code and the United Nations Convention on Contracts for the International Sale of Goods, 7 Ariz. J. Int’l & Comp. L. 69 (1989).
- We realize that this modest accumulation of four factors: (1) difficulty of discovery, (2) contract terms, (3) perishability, and (4) course of performance between the parties after the sale and before rejection, will sometimes take the lawyer only a short distance toward a reliable judgment about whether a buyer’s rejection was timely. However, we despair of doing more than citing a few of the many reported cases and acknowledging that we will gratefully bow to those of more powerful insight or greater wisdom who can distill useful principles from the Code and the decided cases.
- One commentator has written that “[i]f any pattern is emerging it is that the more severe the defect, the greater the time within which the buyer has the right to invoke the remedy, particularly where efforts have been made to compel the seller to repair or replace.” Duesenberg, General Provisions, Sales, Bulk Transfers and Documents of Title, 28 Bus.Law. 805, 827 (1973).
- “Commercial unit” means such a unit of goods as by commercial usage is a single whole for purposes of sale and division of which materially impairs its character or value on the market or in use. A commercial unit may be a single article (as a machine) or a set of articles (as a suite of furniture or an assortment of sizes) or a quantity (as a bale, gross, or carload) or any other unit treated in use or in the relevant market as a single whole.
- Such reasonable grounds can lie in prior course of dealing, course of performance or usage of trade as well as in particular circumstances surrounding the making of the contract. The seller is charged with commercial knowledge of any factors in a particular sales situation which require him to comply strictly with his obligations under the contract as, for example, strict conformity of documents in an overseas shipment or the sale of precision parts or chemicals for use in manufacture. Further, if the buyer gives notice either implicitly, as by a prior course of dealing involving rigorous inspections, or expressly, as by the deliberate inclusion of a “no replacement” clause in the contract, the seller is to be held to rigid compliance. If the clause appears in a “form” contract evidence that it is out of line with trade usage or the prior course of dealing and was not called to the seller’s attention may be sufficient to show that the seller had reasonable grounds to believe that...
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Chapter 10. Warranty 298 results (showing 5 best matches)
- As Comment 7 to 2–103(1)(k) of Amended Article 2 recognized, “transactions often include both goods and information: some are transactions in goods as that term is used in 2–102, and some are not.” Comment 7 was an attempt to resolve the conflict between those who wanted software contracts to be outside Article 2 and those who wanted them in. Since Amended 2 will never be enacted, it is now up to the courts to decide whether contracts for the sale and license of software are covered by Article 2. At this writing it is not clear what will happen. Many courts have summarily applied Article 2 to such contracts with little or no consideration of the question. At its final meeting in 2009, the members of the ALI approved the proposed final draft of the Principles of the Law of Software Contracts. The Principles will be published in their final form before the end of 2009. Then there will be a competing body of law, and courts are likely to be forced at least to address the question.
- Even thought it will probably never be adopted by any state, the proposed section may influence the case law. The basic principle of 2–313A is not new to the case law of sales. The new section would have codified for the first time a large body of case law on what are commonly called “pass-through warranties.” As Comment 1 stated: “The usual transaction in which this obligation arises is when the manufacturer sells goods in a package to a retailer and includes in the package a record that sets forth the obligations that the manufacturer is willing to undertake in favor of the final party in the distributive chain, who is the party that buys or leases the goods from the retailer.” Because there is no direct contact between the seller and the remote purchaser, the obligation of the seller here is not contractual and is not stated as an express warranty. In general we believe that the rule stated in 2–313A are sensible and in accordance with the expectations of both buyers and sellers....
- Comment 6 to Amended Article 2 casts some light. It says its counterpart comment “recognizes that sales by sheriffs, executors, foreclosing lienors and persons similarly situated are so out of the ordinary commercial course that their peculiar character is immediately apparent to the buyer and therefore no personal obligation is imposed upon the seller that is purporting to sell only an unknown or limited right.” Insurance companies, who often purchase the rights of owners of cars that have been stolen from their insured owners and ultimately resell those cars when they are discovered, have argued that they fit within the terms of 2–312(2); that is, that they do not “claim title” in themselves and therefore make no warranty under 2–312. The only two cases that we have found on the point have rejected that argument and have found that the insurance companies are not “situated like” sheriffs and others in such circumstances. ...the auctioneer. The Uniform Sales Act expressly excepted...of
- Under 2–314, there must be a contract for the sale of goods, and the seller must be a “merchant.” In the normal case, proving the existence of a “contract for sale” will pose no problem. The buyer will usually have some evidence of a completed transaction: some written documentation or, at the very least, the defective goods themselves. However, where a purchaser is injured by defective goods before actually paying for them (for example, where a pop bottle explodes and injures a buyer waiting in the checkout line at a grocery store), no such evidence exists and proving that a “sale” occurred may be more difficult. Pre–Code cases, concerned with whether title had passed to the buyer, usually held that the “sale” of an article in a self-service store is not completed until payment has been made. Under the Code, however, passage of title is not determinative. ...cases have held that the “sale” occurs, and the implied warranty protection arises, once the buyer takes physical... ...of the...
- A substantial number of courts have declined to bring the sale of real estate under the scope of the UCC. Those courts which arguably apply the Code to real estate transactions do so primarily in sales of mobile or modular homes. Here, of course, the courts are not called upon to distinguish between goods and services, but rather between goods and real estate. Once a modular home is attached to the real estate it may well pass with a deed and not be merely a fixture but actually a part of the real estate. On the other hand, the sale of a modular home before installation and while it is resting on a truck bed is clearly a sale of goods. One must examine the definition of goods in Article 2 and consider the facts in a particular case with care. Goods sold separately and prior to attachment should surely be covered by the warranties. The same should not necessarily be true when a single contractor agrees to install the modular or mobile home on a piece of property and then to sell the...
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Chapter 4. Terms of the Contract (Including the Law of Tender, Excuse, and Title Transfer (2–403)) 321 results (showing 5 best matches)
- The shelter which 2–403 provides is not unlimited (although no limitations are spelled out in the section). For example, does a purchaser who buys at a “distress” sale get the benefit of the shelter principle? There is a dispute about this. It will be left to the courts to evolve limitations on the 2–403 shelter principle.
- Second, the opening sentence of 2–403 embodies a “shelter” principle. That is, once a transferor has acquired title through 2–403 or its transferees generally benefit accordingly—even when the transferees have knowledge that would keep them from achieving bona fide purchaser status in their own right. Section 2–403 does not use the word “shelter,” but we so read the language granting a transferee “all title” of the transferor. Moreover, prior law did recognize the principle, cognate Code provisions embody the principle, and appropriate protection of a transferee’s “market” for retransfer requires some recognition of a shelter principle.
- The assignment of rights and the delegation of duties in sales contracts is treated in section 2–210. Section 2–210 favors free assignability of rights and delegation of duties except where the rights and duties of the contracting parties are significantly altered. Case law under 2–210 is not plentiful, but the Restatement of Contracts (Second) offers guidance.
- In this discussion we have three modest goals. First, we state the general principles of commercial impracticability. Second, we consider those principles as applied by the courts to a variety of circumstances since adoption of the Code. Third, we discuss the consequences of a finding of commercial impracticability. Under the third heading we consider the principles of allocation in 2–615(b).
- Free assignability of contractual rightslaw. Historically, contractual rights, as well as all other choses in action, were not assignable. They were considered personal rights that by their nature could not be assigned. The assignment of contractual rights was also prohibited at early common law because it was thought to commit “maintenance”—the offense of tending to spur litigation. With the rise of commercial business in the seventeenth century, these rules began to erode. With the Uniform Commercial Code, outright sales of contractual rights are common. Former Comment 4 to old section 9–318 explained that “as accounts and other rights under contracts have become the collateral which secure an ever increasing number of financial transactions, it has been necessary to reshape the law so that these intangibles * * * can be freely assigned.” Section 2–210, thus, reflects the requirements of modern commercial business.
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Chapter 6. Risk of Loss 157 results (showing 5 best matches)
- May I say one other thing in that connection, and say it without any hesitancy at all for the record? The number of lawyers who have an accurate knowledge of sales law is extremely small in these United States. My brother Bacon has taught sales law for 28 years. When he says it isn’t too difficult to determine where the court will decide the title is or isn’t or is going to be or should be, he is speaking a truth within limits for people who have taught sales law for 28 years. I submit to you, sir, that there are not many of them.
- In some ways the basic provisions of 2–509 and 2–510 are the most radical departure from prior law in Article 2. The prior law, section 22 of the Uniform Sales Act, provided in general that the party who had title or property in the goods also had the risk of loss. The usual job of the court in a risk of loss case under the Uniform Sales Act was therefore to determine whether buyer or seller had title to the goods at the time they were lost, stolen, or destroyed. If the seller still had title, in general the seller had to bear the loss and could not recover the price from the buyer; if title had passed, the buyer usually was liable for the price and thus bore the risk. Who had title and what caused title to pass from the seller to the buyer were often mysteries to both the lawyers and the courts. These questions were bountiful sources of litigation and controversy. Speaking before the New York Law Revision Commission, Professor Llewellyn summarized the status of the law under the...
- The law of subrogation has enjoyed an irregular and episodic growth in sales law and in analogous areas. The unsatisfactory state of the law is well illustrated by the English and American cases discussing subrogation of an insurer to the rights of a seller of real property on the one hand and a mortgagee on the other against a buyer and a mortgagor respectively. Assume that the mortgagee or the seller has insurance on the land and buildings, that the policy protects only those interests, the property is destroyed while part of the mortgage debt or purchase price remains unpaid, and the insured mortgagee or seller collects the insurance. If there were no insurance, destruction of the property would not discharge the mortgagor from the mortgage debt, nor, in the land contract case, would it discharge the buyer’s obligation to pay the price. When there is insurance the large majority of the American courts treat the two cases differently. They find that the buyer of real property is...of
- A potential source of confusion is that an ICC Incoterm may differ from its Uniform Commercial Code counterpart. the F.O.B. term may be used for any means of transport including rail or air; the ICC FOB Incoterm however, is restricted to sea or inland waterway transport. Because the ICC recommends that the phrase “Incoterms 2000” be explicitly used in conjunction with Incoterms (e.g., FOB Amsterdam Incoterms 2000), it should usually be apparent when the parties have chosen to use Incoterms rather than the definitions in the Uniform Commercial Code. However, parties to an international sale of goods may be bound by the ICC definitions even though they do not explicitly reference “Incoterms”. For example, this might arise if the parties’ choice of law clause selects the law of a state which by default applies the U.N. Convention on Contracts for the International Sale of Goods (CISG), which itself implicitly incorporates Incoterms as trade usage.
- Section 2–509 divides sales contracts into three basic categories and provides rules for the allocation of risk of loss in each case. Subsection (1) covers those cases in which the “contract requires or authorizes the seller to ship the goods by carrier.” Most business contracts for the sale of goods fall within subsection (1). Subsection (2) covers the less frequent cases in which “goods are held by a bailee to be delivered without being moved * * *.” Subsection (3) is the residuary clause which covers all other cases. Important among the cases covered by subsection (3) are those in which the buyer is, by the contract, to pick up the purchased goods at the seller’s place of business. Below we will consider each of these categories separately and will dwell on some of the interpretative difficulties that may arise under them. Some of the issues we treat below are law school questions only; others pose real practical difficulties. An ...of appellate opinions indicates that 2–509 and...
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Chapter 2. Scope of Article 2, and Offer, Acceptance, and Consideration Thereunder 376 results (showing 5 best matches)
- Article 2 contracts are also expansive in content. Thus 1–201(11) defines “contract” as the “total legal obligation which results from the parties’ agreement,” and 1–201(3) defines “agreement” to mean “the bargain of the parties in fact as found in their language or by implication from other circumstances including course of dealing or usage of trade or course of performance as provided in this Act.” Section 1–205 defines course of dealing and usage of trade while section 2–208 defines course of performance. The Code therefore adds to sales agreements much that is not made express by the parties. Section 1–103 on supplemental general principles also feeds much general contract law into Article 2 sales contracts. Further, 1–102(3) and 1–203 of the Code impose obligations of good faith which may be thought of as part of any Article 2 contract. ...broadens the notion of contract insofar as 2–202 on parol evidence permits parties to prove “extrinsic” terms not provable under various pre...
- Moreover, 2–102 provides that Article 2 does not “impair or repeal any statute regulating sales to consumers, farmers, or other specified classes of buyers.” Such other statutes may be state or federal. Frequently, both Article 2 and one or more other regulatory statutes will apply. For example, Article 2 may apply to warranty terms while the Uniform Consumer Credit Code or other state consumer regulatory law governs the “door-to-door” aspects of the sale. Another important category of examples consists of state or federal legislation dealing with farmers and agricultural products. Still another category of statutes controls the transfer of title to automobiles or aircraft. Today there are also local statutes governing aspects of the sale of pets and domestic animals. In all of the above categories, both Article 2 and the other statutes may apply, and when the two conflict, the other statutory law typically controls.
- We now briefly turn to the expanded concept of contract in Article 2. The expansion we address consists of the expansion of contract in existing Article 2 as compared to contract as conceived in pre code statutory law and case law. Some of the enacted Article 2 provisions on the formation of contracts for the sale of goods have not only radically altered sales law but have influenced the Restatement (Second) of Contracts as well. In most fundamental terms, Article 2 expands our conception of contract. It makes contracts easier to form, and it imposes a wider range of obligations than before. Contract formation is easier in several ways. Parties may form a contract through conduct rather than merely through the exchange of communications constituting “offer and acceptance.” Section 2–204(1) says, “A contract for sale of goods may be made in any manner sufficient to show agreement, including conduct by both parties which recognizes the existence of such a contract.” Sections 2–206(1)...
- Another general issue arises in the “hybrid” cases where there is a combination of properties consisting of non-goods as well as goods, or a combination of services with a sale of goods. Suppose, for example, that seller contracts to sell a going business consisting of goods, realty and goodwill. Or suppose a party undertakes to install a plumbing system in a house under construction and is also to provide the copper tubing. In such “hybrid” cases, a minority of courts apply Article 2 to the sale of goods aspects of the transaction only, whereas a majority apply Article 2 if the “predominant purpose” of the whole transaction was a sale of goods, and in that event, the majority usually applies Article 2 to the whole. If a sale of goods is not the “predominant purpose,” then Article 2 does not apply at all. It may be added that in the overwhelming majority of cases, Article 2 has been found applicable. Here we offer a caveat about the predominant purpose test. It presupposes that if...of
- The ALI has recently issued its proposed final draft of the Principles of the Law of Software Contracts. The following section is relevant to the enforcement of standard form contracts:
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Chapter 3. Statute of Frauds and Parol Evidence Rule 274 results (showing 5 best matches)
- In Colonial America and after, state legislatures and courts followed suit. In the Twentieth Century, section four of the Uniform Sales Act became law in most states. Yet the law also eventually permitted parties to lawsuits to testify on their own behalf, both in England and in America. Further, both in England and America the law eventually gave courts certain power to deal with unreasonable jury verdicts. And in 1954 the British Parliament repealed its 1877 statute of frauds for the sale of goods. However, those state-side law professors who, in the 1940’s and 1950’s, evolved the Uniform Commercial Code did not follow suit. They kept the spirit of ’77 alive in section 2–201 of the Code. Section 2–201(1) provides that “a contract for the sale of goods for the price of $500 or more is not enforceable by way of action or defense unless there is some writing sufficient to indicate that a contract for sale has been made.” ...saw it as a means to the end of combatting perjured...
- Unless displaced by the particular provisions of this Act, the principles of law and equity, including the law merchant and the law relative to capacity to contract, principal and agent, estoppel, fraud, misrepresentation, duress, coercion, mistake, bankruptcy, or other validating or invalidating cause shall supplement its provisions.
- Section 2–201 does not apply to the sale of realty. It does not apply It does not apply to the rendering of services for a price. It does not apply to the sale of corporate stocks and bonds or to choses in action generally. It does not apply to contracts of employment, commission, or brokerage even when these look to the sale of goods. or to options. Nor does the section by its terms apply to leases (or the like) of personalty. Rather the section applies to a “contract for the sale of goods for the price of $500 or more.” Section 2–106(1) defines a “sale” as “the passing of title from the seller to the buyer for a price,” and 2–105(1) defines “goods” generally to mean “all things which are movable at the time of identification to the contract for sale.” When a transaction includes both the sale of goods and the transfer of rights in information, it is up to the courts to determine whether the transaction is entirely within or without of Article 2, or whether or to what extent...
- R. Nordstrom, Handbook of the Law of Sales § 27 (1970). See EMSG Systems Division, Inc. v. Miltope Corp. 37 UCC2d 39 (E.D.N.C. 1998) (not enough to start an order under 2–201(3) but must actually produce “each individual good”).
- An earlier version included a writing requirement for certain sales of “personal property.” The Code also includes a specific writing requirement for sale or return deals, for sales of securities And 5–104(1) and (2) incorporated a kind of statute of frauds requirement for certain credits or letters of credit.
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Chapter 5. Unconscionability 165 results (showing 5 best matches)
- under the circumstances of this case, the sale of a freezer unit having a retail value of $300 for $900 ($1,439.69 including credit charges and $18 sales tax) is unconscionable as a matter of law.
- Unless displaced by the particular provisions of [the UCC], the principles of law and equity, including the law merchant and the law relative to capacity to contract, principal and agent, estoppel, fraud, misrepresentation, duress, coercion, mistake, bankruptcy, and other validating or invalidating cause shall supplement its provisions.
- Summers, “Good Faith” in General Contract Law and the Sales Provisions of the Uniform Commercial Code, 54 Va.L.Rev. 195 (1968).
- Suffice it to say that in the instant case the court finds as shocking and therefore unconscionable, the sale of goods for approximately two and one-half times their reasonable retail value. This is particularly so where, as here, the sale was made by a door-to-door
- Allegedly unconscionable remedy meddling has been another battleground in the case law. A creditor-seller’s contractual meddling with its own and the buyer’s rights and remedies upon default can take a variety of forms. Typically, a credit seller will attempt to set liquidated damages for nonacceptance, and disclaim some or all of its warranty liability. Seller may also include a waiver of defense clause, and if the sale is on secured credit, may include a clause that gives the seller a right to repossess if it “deems itself insecure.” In addition there are various other examples such as consent to jurisdiction of a court far distant from the buyer’s home.
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Chapter 4. Terms of the Contract (Including the Law of Tender, Excuse, and Title Transfer (2–403)) Part 2 211 results (showing 5 best matches)
- Unless displaced by the particular provisions of the Uniform Commercial Code the principles of law and equity, including the law merchant and the law relative to capacity to contract, principal and agent estoppel, fraud, misrepresentation, duress, coercion, mistake, bankruptcy, or other validating or invalidating cause supplement its provisions.
- Compare In re Dennis Mitchell Indus., Inc., 419 F.2d 349, 6 UCC 573, 7 UCC 112 (3d Cir.1969) (shelter principle applies to sale by bankruptcy trustee) with R. Anderson, Uniform Commercial Code § 2–403:9 (2d ed.1970) (no shelter principle at judicial sales). We favor the Third Circuit view.
- Farnsworth, Disputes Over Omission in Contracts, 68 Colum.L.Rev. 860 (1968). See also Hurst, Freedom of Contract in an Unstable Economy: Judicial Reallocation of Contractual Risks Under UCC § 2–615, 54 N.C.L.Rev. 545 (1976); Note, Schwartz, Sales Law and Inflations, 50 So.Calif.L.Rev. 1 (1976); Duesenberg, Contract Impracticability: Courts Begin to Shape § 2–615, 32 Bus.Law. 1089 (1977); Contractual Flexibility in a Volatile Economy: Saving UCC § 2–615 from the Common Law, 72 N.W.U.L.Rev. 1032 (1978); Wallach, Excuse Defense in the law of Contracts: Judicial Frustration of the U.C.C. Attempt to Liberalize the Law of Commercial Impracticability, 55 Notre Dame L.Rev. 203 (1979); Huffmire, § 2–615 and Corporate Accountability, 13 UCC L.J. 256 (Winter 1981); Black, Sales Contracts and Impracticability in a Changing World, 13 St. Mary L.J. 247 (1981); Marcantonio, Unifying the Law of Impossibility, 8 Hastings Int’l & Com.L.Rev. 41 (1984).
- See generally, L. Vold, Handbook of the Law of Sales § 79 (2d ed.1959).
- Prosser, Open Price in Contracts for Sale of Goods, 16 Minn.L.Rev. 733, 733 (1932). See also Howard, Open Terms as to Price in Contracts for the Sale of Goods, 48 Aust.L.J. 419 (1974). Cf. 1 N.Y.State Law Revision Comm’n. 1955 Report 662–67 (1955).
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Chapter 24. The Bankruptcy Trustee vs. The Article 9 Claimant 165 results (showing 5 best matches)
- Could a trustee use section 544(b) and state fraudulent conveyance law to upset a foreclosure? Until the case (BFP v. Resolution Trust Corp., 511 U.S. 531, 114 S.Ct. 1757, 128 L.Ed.2d 556 (1994)) held otherwise, federal courts had sometimes recognized a right of the trustee to upset a foreclosure sale under the provisions of section 548. closes that avenue. Could a clever trustee now use 544(b) and the state fraudulent conveyance law to the same effect? We doubt it. In using section 544(b) the trustee would be subrogating himself to the rights of a creditor and that creditor would be asserting that a state foreclosure sale proper under one state law would nevertheless be a fraudulent conveyance under another law of the same state. To say that Congress’ enacting 548 shows an intention to overturn properly conducted state-law foreclosure proceedings may be plausible; to say that a state legislature intended the same thing about its own law is not plausible. One would be arguing...
- a seller of goods asserted reclamation rights to proceeds from the sale of goods delivered just prior to foreclosure. Prior to delivery of goods by seller, Westside Bank had perfected a security interest in after-acquired property of Texas Electronics Mart, Inc. (TEMI) in order to secure a loan. Upon default by TEMI, all assets of TEMI were sold at foreclosure and the funds, less Westside’s interest, were deposited with the district court for distribution among TEMI’s creditors. Reasoning that foreclosure by a prior secured lender cuts short a seller’s right to reclamation, the district court held the seller of goods had no right to proceeds from the sale of assets. Judge Brown reversed, in part, holding that a seller of goods in the setting of foreclosure maintains priority status against a buyer’s unsecured creditors and foreclosure by a prior secured lender does not terminate a reclaiming seller’s right to remaining proceeds. Hence, a seller of goods in compliance with statutory...
- Bankruptcy is, of course, a remedy of the federal law. Since this is a book about the Uniform Commercial Code and not about bankruptcy, we focus here only on a small part of the bankruptcy law, principally on the avoidance powers of the trustee in bankruptcy.
- By far the most common and most simple clash is between the bankruptcy trustee and the Article 9 claimant who either fails to perfect or lets its perfection lapse. As you see below the federal law gives the trustee, as of the date of the filing of the bankruptcy petition, the rights of a state law lien creditor; under section 9–317 a lien creditor has priority over an unperfected security interest. Thus the trustee prevails under a blend of federal and state law by applying section 544(a) which states:
- Under section 544(a) the trustee gets all the rights under state law of a hypothetical creditor with a judicial lien on all property of the debtor. For our purposes the relevant state law is Article 9, and the relevant provision is 9–317(a)(2), doubtless the most important provision in the entire Article to bankruptcy trustees. As amended in 1999, subsection 9–317(a)(2) reads as follows:
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Chapter 20. Electronic Funds Transfers Part 2 348 results (showing 5 best matches)
- [A]ttempts to define rights and obligations in funds transfers by general principles, or by analogy to rights and obligations in negotiable instrument law or the law of check collection have been unsatisfactory.
- 2) If the beneficiary’s bank does not credit an account of the beneficiary, (for example, when the payment order directs beneficiary’s bank to pay currency to the beneficiary who is not an account holder at the beneficiary’s bank) payment occurs according to principles of law that determine when an obligation is satisfied (§ 4A–405(b)).
- Funds transfers involve competing interests—those of the banks that provide funds transfer services, and the commercial and financial organizations that use the services, as well as the public interest. These competing interests were represented in the drafting process and were thoroughly considered. The rules that emerged represent a careful and delicate balancing of those interests and are intended to be the exclusive means of determining the rights, duties and liabilities of the affected parties in any situation covered by particular provisions of the Article. Consequently, resort to principles of law and equity outside of Article 4A is not appropriate to create rights, duties and liabilities inconsistent with those stated in this Article.
- “abrogate other common law principles applicable to commercial transactions,” including the idea that the “party best suited to prevent the loss caused by a third party wrongdoer must bear that loss.” Under both of these lines of reasoning, the dissent would have held Corfan liable for the loss. We are persuaded by the dissent’s arguments and believe that this case should have resulted in Corfan taking the loss on these facts.
- (C) any transaction the primary purpose of which is the purchase or sale of securities or commodities through a broker-dealer registered with or regulated by the Securities and Exchange Commission;
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Chapter 26. Default and Its Consequences 205 results (showing 5 best matches)
- Sometimes the secured creditor will wish to accept the collateral in complete or partial satisfaction of its debt, i.e., secured creditor does a “strict foreclosure.” For a number of reasons the creditor may decide that repossession, resale, and suit for a deficiency are not feasible or not productive. Taking the collateral in full or partial satisfaction enables the creditor to avoid any challenge to its notice or conduct of sale. It also enables the creditor to avoid the cost of a formal notice and sale. Moreover, the strict foreclosing creditor may thereafter sell the goods wherever and however it wishes. Indeed if the creditor believes the collateral will bring a better price several months hence, it may have to go through a strict foreclosure to avoid the claim that its delay was unreasonable. This alternative of “strict foreclosure,” known to the common law, was available under the Uniform Conditional Sales Act. Prior to 1999, section 9–505 authorized strict foreclosure....
- The Comments also contain a discussion of the rights of junior secured parties. They even discuss and invite the use of the marshaling principle (where a creditor with a claim on two funds might be required first to satisfy itself out of only one of those funds if a competing creditor had a claim only on the other). So reader beware, much new law lurks in the Comments.
- The problem of high debtor expectations and low resale prices was a prominent feature of the American real property security law during the 1920s and 1930s. State legislatures enacted many detailed rules in fruitless attempts to satisfy their debtor constituents. Article 9 of the UCC is informed by those attempts; surely the original drafters of article 9 were intimately familiar with all of the failed debtor protection legislation of that era. In certain circumstances the drafters consciously chose to depart from real property practice. For example, it is still common for the sheriff to conduct a public sale on the foreclosure of real estate. These sales, conducted on the courthouse steps, invariably bring a low price; commonly the price offered by the secured creditor who “bids in” is debt. The drafters of article 9 do not require the secured creditor to do a public sale; understanding the inadequacy of sheriff sales, the drafters encouraged secured creditors under Article 9 to...
- Part 6 of Article 9 of the 1999 Code differs only slightly from Part 5 of the prior law. That law was based on various pre-Code sources. Generally, the resale provisions of Part 6 of Article 9 follow the less restrictive provisions of the Uniform Trust Receipts Act, not of the formalized procedures required by the Uniform Conditional Sales Act. The basic policies of the resale provisions are twofold: to allow realization on the collateral with a minimum resort to judicial proceedings and to encourage higher yields upon disposition by allowing private as well as public sale of collateral.
- The cases decided under the former law form the backbone of the basic law under Revised Article 9. Section 9–610(b) is the central rule on disposition and provides that “[e]very aspect of a disposition of collateral, including the method, manner, time, place, and other terms, must be commercially reasonable.” Hundreds of reported opinions interpret the words in the quoted sentence. These cases make dismal reading for the secured creditor; they seem to be an endless repetition of the Peter Principle corollary: What can go wrong, will.
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Westlaw Overview 1 result
- offers a detailed and comprehensive treatment of the basic rules, principles, and issues relating to commercial law. To supplement the information contained in this book, you can access Westlaw, West’s computer-assisted legal research service. Westlaw contains a broad array of legal resources, including case law, statutes, expert commentary, treatises, law reviews and journals, current developments, and other types of information.
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Chapter 7. Buyer’s Remedies for Repudiation, for Nondelivery and for Failure to Deliver Conforming Goods (Which the Buyer Refused to Keep) 230 results (showing 5 best matches)
- The measure of damages for the anticipatory repudiation of a duty to deliver, or to accept, goods under a contract of sale, is to be determined as of the date when performance was due, rather than the date of repudiation, under New York law.
- What of the contract price? Section 2–723 does not in terms say that the “contract price” at the time buyer learns of the repudiation should be the other part of the damage formula. But surely the contract price must also be measured at the time the aggrieved party learned of the repudiation. To choose any other price deprives the contract-market differential of its legitimacy. Damages are measured by comparing the market price with the contract price at a particular time and place on the ground that the aggrieved party will turn to that market for purchase or sale. To select a contract price remote in time from the date of repudiation is to ignore that basic principle upon which the contract market differential formula is based.
- Of course the Code drafters did not write on a here but upon a slate already crowded with centuries of judicial and legislative markings. The most familiar of these is the requirement that for a court to grant specific performance, the plaintiff’s remedy at law must be inadequate to put him in the same position as performance would have. Section 68 of the Uniform Sales Act sought to liberalize that requirement by inviting a court to grant specific performance as to “specific or ascertained goods” whenever it “thinks fit.” However, the pre-Code decisions (both under the USA and general equity powers) did not much expand the use of specific performance in sale of goods cases.
- Our analysis of place of tender in 2–713 is consistent with pre-Code case law. The Uniform Sales Act specified no particular place for the measurement of damages, and many courts relied on Judge Cardozo’s holding in Standard Casing Co. v. California Casing Co., where plaintiff-buyer in New York contracted for twenty casks of salted pig guts F.O.B. shipping point from a California seller:
- Section 2–713’s statutory ancestor is section 67 of the Uniform Sales Act: “Action for Failing to Deliver Goods.” The only important departure in 2–713 from USA § 67 is the choice of the “time when the buyer learned of the breach” as the time for measuring the market. The Uniform Sales Act, in the absence of special circumstances, used “the time or times when they ought to have been delivered, or, if no time was fixed, then at the time of the refusal to deliver.” Except in the anticipatory repudiation cases (see 7–7 ) where the “learned of the breach” language contributes to confusion, this difference in the time when one measures the market is not likely to be significant since the buyer will usually learn of the breach at the time of tender or shortly thereafter. In fact, under the Code, there has not been much change in the law as applied by the courts. ...defendant, F.O.B. shipping point (Cuba). Defendant breached by sending too small a quantity, and plaintiff was unaware of...
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Chapter 13. Disclaimers of Warranty Liability and Modification of Buyer’s Remedies 332 results (showing 5 best matches)
- Seller’s contract, bolstered by Code principles of freedom of contract, affords some protection for the seller who wishes to avoid liability that would otherwise arise from implied warranties or from express statements made in the heat of a sales pitch or otherwise. Section 1–102(3) provided that “[t]he effect of provisions of this Act may be varied by agreement, except as otherwise provided * * *.” Building on this general principle, as now set forth in 1–302 of Article 1, sections 2–316 and 2–719 delineate specific measures that the seller may take to disclaim warranty liability and to limit the buyer’s remedies for breach. Also, 2–202, the Code’s parol evidence rule, enables the seller sometimes to disavow statements made by salespersons that could be construed as express warranties, a topic we treated in Chapter 10.
- [I]t is of the very essence of a sales contract that at least minimum adequate remedies be available. If the parties intend to conclude a contract for sale within this Article they must accept the legal consequence that there be at least a fair quantum of remedy for breach of the obligations or duties outlined in the contract.
- A New Jersey court has indicated that the use of an “as is” clause in a contract for the sale of new goods may be inoperative. Gindy Manufacturing Corp. v. Cardinale Trucking Corp. involved the sale of twenty-five new semi-trailers. The contract form, which the seller used for the sale of both new and used vehicles, contained an “as is” disclaimer. The court found that under the custom of the trade, “as is” clauses are expected in contracts for the sale of used vehicles but not when new vehicles are involved.
- Under pre-Code law, a clause providing that the contract “contains the entire agreement of the parties, and that there are no antecedent or extrinsic representations, warranties, or collateral provisions that are not intended to be discharged and nullified” was often effective to exclude evidence of alleged oral warranties. the buyer was precluded from raising breach of warranty claims based on seller’s prior oral representations where the parties signed an integrated agreement as their “only agreement.” In Green Chevrolet v. Kemp, which involved the sale of a used car, the conditional sales contract provided that it covered all conditions and agreements between the parties. The Arkansas Supreme Court held that 2–202 and the contract provision prevented the introduction of evidence that the salesperson made an oral guarantee concerning the mechanical parts.
- For an argument based on the comments that 2–316(3)(a) does not incorporate a conspicuousness requirement, see Hogan, The Highways and Some of the Byways in the Sales and Bulk Sales Articles of the Uniform Commercial Code, 48 Cornell L.Q. 1, 7–8, 8 n.29 (1962). See also Lord, Some Thoughts About Warranty Law: Express and Implied Warranties, 56 N.D.L.Rev. 509, 680–684 (1980). Further on conspicuousness, see Tulger Contracting Corp. v. Star Building Systems, 52 UCC2d 917 (S.D.N.Y. 2002); Parsley v. Monaco Coach Corp., 327 F. Supp.2d 797, 54 UCC2d 301 (W.D. Mich. 2004) (conspicuous though on back). Accord, Pitts v. Monaco Coach Corp., 330 F. Supp.2d 918, 54 UCC2d 316 (W.D. Mich. 2004) (were references on front to notice on back). See also Alcan Aluminum Corp. v. BASF Corp., 133 F.Supp.2d 482, 44 UCC2d 432 (N.D. Tex. 2001) (conspicuous though on back).
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Chapter 23. Creation and Perfection of Enforceable Article 9 Interests 347 results (showing 5 best matches)
- [I]f the proceeds are not goods, to the extent that the secured party identifies the proceeds by a method of tracing, including application of equitable principles, that is permitted under law other than this article with respect to commingled property of the type involved.
- One who reflects on the nature of the collateral covered by Article 9 will appreciate that the pledge is uniquely suited to certain kinds of collateral, and quite unsuited to others. Since the creditor’s possession (and the debtor’s lack of it) puts third parties on notice, the collateral must be something that one can see, touch, and move. The collateral must have a physical embodiment that is recognizable as the exclusive representation of the right. It follows that accounts and general intangibles cannot be perfected by possession. Even if one collects ledger cards, journals, computer print-outs, sales slips and any other items believed to represent receivables, the creditor will not, by those acts, perfect a security interest in accounts or general intangibles. Article 9’s treatment of these items as non-possessible comports with the pre-Code common law and with the abstract nature of that property. For example, since no ...of accounts is recognized, one creditor might seize...
- Automatic perfection applies only if there is a “sale” of the intangible or note. If a transaction is not a “sale,” such as the grant of a security interest or a mere assignment for security, the transaction is within Article 9, and the automatic perfection provisions of 9–309 do not apply. How does one distinguish between a sale, on the one hand, and a grant of a security interest or a non sale assignment, on the other? The distinction lies mostly in the amount of recourse the transferee has against the transferor. In a classic factoring “sale” of accounts the factor purchases the accounts from the obligee and frees the obligee (the seller of the accounts) from any recourse in case the account debtor fails to pay. In effect the entire risk of non payment by the account debtor (and the entire benefit of full payment) is transferred to the factor or buyer. If, on the other hand, one chose to “lend” against a debtor’s accounts, the debtor might be asked to sign a note and grant a...
- The certificate of title notation rules take the place of Article 9 filings with respect to goods covered by certificates of title. Thus, because of 9–311, a secured creditor perfects its security interest in an automobile for which a certificate of title has been issued, by complying with the state’s certificate of title law (usually notation on the certificate). This exception to Article 9 filing is subject to an exception for cases where cars or other goods subject to the certificate of title laws are held in inventory for sale, (9–311(d)). In that case the vehicles are treated like any other inventory and so must be the subject of an Article 9 filing for perfection.
- A similar claim was made about sales of promissory notes in “mortgage warehousing.” In mortgage warehousing, a creditor lends to a mortgage lender and takes a security interest in the pool of notes and mortgages pending the securitization and sale of those notes and mortgages to third parties.
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Chapter 25. Priority Conflicts 246 results (showing 5 best matches)
- Because the federal act contains its own definition of “buyer in ordinary course,” a notice that tells the buyer that a sale to that buyer by a specific farmer is a violation of a security agreement will not keep the buyer from being a purchaser in the ordinary course under the federal definition. Under the UCC, however, one who has notice that the sale to him is in “violation of the ownership right or security interest” is not a buyer in the ordinary course. Under the federal law, that person can be a buyer in the ordinary course because there is no similar knowledge exclusion.
- Congress was not impressed with lenders’ justification for the anti-bona fide purchaser rule for farm sales. Farm lenders had justified the exception to bona fide purchaser priority in former 9–307 for farm products on the ground that buyers of farm products are much more sophisticated than the typical consumer buyer and can therefore be expected to check the files and to remit proceeds when necessary to the one holding a security interest. Moreover, they analogize such sales to bulk sales, for in many cases a farm product sale will constitute the sale of all of the livestock of a farm or of its entire crop in one sale on a single day to a single person.
- Reading the definition together with the rule of law results in the buyer’s taking free if the buyer merely knows that a security interest covers the goods but taking subject if the buyer knows, in addition, that the sale violates a term in an agreement with the secured party.
- Goods cross the line from pure goods to fixtures when they become sufficiently related to the real estate that they would pass in a deed under the local real estate law. What passes by deed in Minnesota may not pass in Wisconsin, and what is sufficiently related to a real estate interest in New York might not be sufficiently related in Georgia. Thus the general definition in 9–102(a)(41) is no more than a cross reference to state case law and state real estate statutes. What, then, are the state law principles governing when goods become fixtures? We cannot go much beyond posing the question.
- That the buyer must purchase in “good faith” and “without knowledge that the sale to him is in violation of the * * * security interest of a third party” may cause uncertainty. Exactly what the good faith requirement adds is unclear. Also, the requirement that the buyer have no knowledge may seem to conflict with the words of 9–320(a), which permits the buyer to take free even though the buyer “knows of [the security interest’s] existence.” On careful reading the two requirements do not conflict. The buyer fails to qualify under 9–320(a) only if buyer knows that the sale is “in violation” of the security interest. Normally a lender with a security interest in inventory intends the debtor to be able to sell the inventory free and clear. Thus, it is perfectly consistent for a buyer to know of a security interest but to believe the sale is not in violation of that interest.
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Index Part 2 249 results (showing 5 best matches)
Title Page Part 2 225 results (showing 5 best matches)
- 1–2 UCC Purposes and Policies and the Applicability of Supplemental Principles of Law
- 26–12 Legal Consequences of Sale and Application of Proceeds, Sections 9–615, 9–617, and 9–619
- 22–6 Sales of Accounts, Chattel Paper, Payment Intangibles, Promissory Notes
- 22–10 Applicability of Article 9 to “Security Interests” That Arise Under Article 2 on Sales, Sections 9–109(a)(5), 9–110
- 15–9 Rights of a Holder in Due Course—The Effect of the Federal Trade Commission Legend and of Similar State Laws on Holder in Due Course Status
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Index 831 results (showing 5 best matches)
- UCC inclusion of supplementary principles of common law, § 1-2
- ALI PRINCIPLES OF THE LAW OF SOFTWARE CONTRACTS
- UCC inclusion of supplementary principles of common law, § 1-2
- UCC inclusion of supplementary principles of common law, § 1-2
- UCC inclusion of supplementary principles of common law, § 1-2
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Chapter 22. Scope of Article 9 225 results (showing 5 best matches)
- Although Article 9 was the most innovative of the original Code articles, it did not spring full grown from the forehead of Grant Gilmore, Allison Dunham, or even Karl Llewellyn. The drafters drew heavily on a large body of separate pre-Code personal property security law. In pre-Code days, the lawyer had to work with a variety of security devices, each governed by its own body of law. These included the pledge, the chattel mortgage, the conditional sale, the trust receipt, and the factor’s lien.
- Modern practice has grandly expanded the factor’s business. The new practice is called “securitization.” In a securitization transaction the creditor sells its accounts to a trustee who in turn sells “shares” or “participations” in the trust to investors. Since former 9–102(1)(b) covered only sales of “accounts or chattel paper,” the status of many securitizations was uncertain. Before 1999, Article 9 rights to payment that arose from a not “accounts”; “accounts” arose only on the sale of goods or services. Thus, for example, a securitization of $100 million of commercial loans or $200 million of credit card receivables would not have been covered by Article 9 since they would have amounted to the “sale of general intangibles” not the “sale of accounts or chattel paper.” The change in the definition of accounts (to include credit card receivables, 9–102(a)(2)(vii)) and the expansion of Article 9’s coverage (to include sales of payment intangibles and promissory notes, 9–109(a)(3)),...
- The grand innovation of Article 9 in 1962 was the introduction of a “unitary” security device. Formerly there had been entirely separate bodies of law with various security devices: pledges, chattel mortgages, conditional sales, trust receipts, and many more. And the law was different from state to state; what was statutory in one place was in the cases elsewhere or completely missing from the published law. In place of this, Article 9 substituted one device and one set of basic terms: security agreement, secured party, debtor, collateral and security interest. In place of the various bodies of substantive law governing the various pre-Code security devices, the drafters substituted a single body of law in Article 9. Only a few of the pre-Code legal distinctions between different pre-Code devices based solely on the form of the collateral reappear in Article 9, ...attached either to the different types of collateral (e.g., goods, accounts, etc.) recognized in Article 9, or... ...of...
- If the transaction were merely a bailment, it would present no significant issue of law; the law would be clear—the bailed goods would be returned to the owner upon promised payment. Without more, the bailee’s creditors would have no rights to the goods. Because these transactions also bear some of the earmarks of a sale, the processor’s trustee in bankruptcy or its secured creditors will argue that the owner is nothing more than an unsecured creditor or, at best, an unperfected secured creditor.
- “Lease” means a transfer of the right to possession and use of goods for a period in return for consideration, but a sale, including a sale on approval or a sale or return, retention or creation of security interest or license of information is not a lease. Unless the context clearly indicates otherwise, the term includes a sublease.
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Chapter 11. Damages for Breach of Warranty 153 results (showing 5 best matches)
- Traditionally, most courts have not been willing to grant recovery under the Code for lost profits resulting from a loss of customer good will. These courts reasoned that alleged damage to business reputation is too speculative to be recoverable. However, several courts, including the Southern District of New York applying New York law, have now recognized that a buyer may be able to show injury to business reputation with a sufficient degree of certainty and have allowed recovery for loss of good will. Because the legal principle of certainty in the plaintiff’s case is indivisible from factual questions about the amount and probity of plaintiff’s evidence, it is difficult to make sensible and useful generalizations about that principle. Often cases cited under the certainty rubric could be as easily explained by saying that the “plaintiff merely failed to prove damages” or “failed to prove plaintiff’s case” or “failed to prove causation.” So stated, the principle is reduced to a...
- Sales contracts frequently make repair or replacement of defective parts the buyer’s exclusive remedy. Assuming the seller complies with the sales obligation, the contract ensures the buyer goods of warranted value.
- principle of reasonable foreseeability traditionally has been applied in an excessively demanding fashion, and that a new formulation is in order. See Eisenberg, The Principle of Hadley v. Baxendale, 80 Calif. L. Rev. 563 (1992). Perhaps the “reason to know” language of 2–715(2) codifies a more liberal application of the foreseeability standard. Calls for the overthrow of the regime of
- Consider why it might be in the interest of a particular plaintiff to state a cause of action in warranty or in tort. First is the statute of limitations. Section 2–725 has a four year statute—longer than most tort statutes—but the statute commences to run from the time of sale. On the other hand, tort statutes typically run from the time of discovery. Depending, therefore, on the time of discovery, Article 2 or alternatively the state statute on tort may be more favorable to the plaintiff. Second are the defenses available to a defendant who is sued in warranty. Among these might be a disclaimer, a limitation of remedies, plaintiff’s failure to give notice, lack of privity or other defenses based upon the knowledge of the plaintiff or plaintiff’s contributory behavior. Some but not all of those defenses exist under other rubrics in tort law, but they tend to have less bite in tort. To escape from many of the contract defenses was one of Professor Prosser’s justifications for the...
- Peters, Remedies for Breach of Contract Relating to the Sale of Goods Under the Uniform Commercial Code: A Roadmap for Article 2, 73 Yale L.J. 199, 269 (1963).
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Chapter 18. NSF Checks, Documentary Drafts, and Forged Checks: Liability of Payors and of Collecting Banks, Final Payment, Delay 294 results (showing 5 best matches)
- The general right to restitution for a mistaken payment rests on common law unjust enrichment principles set forth in sections 1, 6, and 15–38 of the Restatement of Restitution. The basic elements of the payor’s prima facie case are (1) that the payment must have been made on the basis of a mistake of fact existing at the time of payment, and (2) the payment would not have been made had the true facts been known to the payor. Section 59 of the Restatement also recites the rule that negligence of the payor does not, as such, bar it from a restitution recovery.
- In some cases, however, it may not be clear whether a drawee bank should have a right of restitution. For example, a check kiting scheme may involve a large number of checks drawn on a number of different banks in which the drawer’s credit balances are based on uncollected funds represented by fraudulently drawn checks. No attempt is made in Section 3–418 to state rules for determining the conflicting claims of the various banks that may be victimized by such a scheme. Rather, such cases are better resolved on the basis of general principles of law and the particular facts presented in the litigation.
- In common practice such a draft might be drawn by the seller of cattle on the buyer. The draft might provide that it is “payable through” the buyer’s bank. In that case the draft might be attached to a bill of sale (“the document”) and it is likely to be collected through the banking system. The drawer will have deposited the draft for collection in his own bank, who in return will have transferred it for collection to buyer’s bank.
- Section 3–418(b) incorporates other (non UCC) state laws of restitution and permits the payor bank who has paid by mistake to recover the money from the party paid—where state common law allows. This means, of course, that the payor bank’s right to restitution will depend in part on law that will vary from state to state.
- One difficulty with all this is that it is not certain that Regulation CC states a federal rule intended to override contrary state law in all situations. The Supremacy Clause of the Constitution does not become relevant until one has determined that the federal government’s agents intended federal law to override contrary state law. Indeed, it is not clear that the Federal Reserve intended that these provisions of Regulation CC would govern the issue of timing for the purpose of determining final payment. In some places in Regulation CC the Federal Reserve explicitly declares its intent to modify contrary state law.
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Preface—Third Edition 4 results
- Several chapters in this new edition called for relatively little textual revision because few significant developments of principle occurred in the areas involved between 1980 and 1988. Even in those areas, we have usually added footnote citations to the newly accumulated case law.
- In both the two-volume and the one-volume version of the third edition, we provide not only systematic textual discussions but further new ideas of our own. Both versions take account of many recent case law developments, various new statutes (federal and state), and significant contributions to periodical literature. Both also include a new Chapter 17 called “NSF Checks, Documentary Drafts, and Forged Checks: Liability of Payors and Collecting Banks, Final Payment, Delay.”
- When we began the first edition nearly twenty years ago, we did not envision how dramatically the mountain would continue to grow while we were in the very course of trying to climb it. Today, the Code case law is vast. So, too, the statutory law, state and federal, that intersects with the Code. Many states now have their own relatively developed Code jurisprudence. Still, we hope and trust that for a while yet there will be a place in the legal firmament for multi-jurisdictional treatises on the Code.
- The first edition appeared in late 1972. The second edition appeared in 1980. After another eight year interval, we have published a third edition. This third edition takes two forms: (1) a two-volume work especially for practitioners and the courts, and which will be periodically updated with pocket parts, and (2) this abridged one-volume work primarily for use by students in the law schools.
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Chapter 12. Defenses to Warranty Actions 142 results (showing 5 best matches)
- By statute or case law many states have now adopted some form of comparative fault in traditional tort cases. Comparative fault principles have begun to seep from negligence actions into strict tort and, recently, into warranty actions.
- See 4 A. Corbin, Contracts § 989 (1951). See generally, Garvin, Uncertainty and Error in the Law of Sales: the Article 2 Statute of Limitations, 83 Boston U. L. Rev. 345 (2003). Of course, the transaction must be a transaction in goods. See, e.g., DiIorio v. Structural Stone & Brick Co., Inc., 368 N.J.Super. 134, 845 A.2d 658, 53 UCC2d 249 (A.D. 2004) (only incidentally a transaction in goods, so not applicable). See also, Gannett v. Pettegrow, 2005 WL 217036, 55 UCC2d 936 (D. Me. 2005) (predominantly a contract for services).
- How do and should these comparative fault principles apply in strict tort and applied warranty actions? To some extent the court’s reaction to an argument for comparative fault in strict liability will depend upon the statute that has been enacted. If the legislature enacts a statute that provides “all products liability actions brought [for] personal injury or property damage” are covered by the comparative rules, presumably the legislature intended to include some warranty actions, and the courts have the responsibility to work comparative fault principles into personal injury, or property damage warranty actions. That was the conclusion of the Michigan Supreme Court applying such a statute in Karl v. Bryant Air Conditioning Co. If, on the other hand, the statute provides only that comparative fault applies in “negligence actions,” the courts would have no such responsibility to work comparative fault principles into other schemes. In Correia v. Firestone Tire & Rubber Co., ...of...of
- Comment 2 to 2–312 makes clear the drafters’ opinion that the implied warranty of title and its corollary of quiet possession is breached if at all, at the time of sale. It reads as follows:
- We have two concerns. First, in general, we think it important that the system have the grit to put the loss on the least cost-risk avoider in the hope that all the rest of us do not pay the price for another’s foolishness. To some extent, ideas of comparative fault may diminish that possibility by freeing the courts of the hard tasks of deciding who really is the least cost-risk avoider. Second, we are concerned that ideas of comparative fault may encourage lawsuits that should not be brought. These principles may improve the chances of a jury verdict even for those who do not deserve one.
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Chapter 20. Electronic Funds Transfers 311 results (showing 5 best matches)
- when payment * * * occurs is governed by principles of law that determine when an obligation is satisfied.
- In summary, the scope question comes in two forms under Article 4A. In the first, Article 4A has nothing whatever to do with the transaction that is covered completely by other law. Consumer point of sale transactions are illustrative. Even the usual excluded debit transfer is easy to distinguish, for there the instruction to pay is given by the person receiving payment.
- By making credit to the beneficiary “provisional,” and subject to the sender discharging the sender’s obligation to settle with the beneficiary’s bank, the beneficiary’s bank could transfer this form of credit risk to the beneficiary. What was disturbing about such provisional credit was the inability of the beneficiary to control or limit its credit risk. Because of a lack of privity between the beneficiary’s bank’s sender and the beneficiary, the beneficiary was ill-suited to reject payment orders from those who were considered unworthy of credit. The beneficiary’s bank was the party best positioned to prevent that kind of loss because it was in privity with this sender. Because it is a fundamental principle of commercial law to place risk of loss on the party best positioned to control it, 4A–405(c) provides that any agreement rendering provisional the credit to the beneficiary’s account is not enforceable.
- General Motors, the debtor, uses neither a check nor a credit card. But it is not the absence of paper that makes this transaction into a 4A transfer or the presence of paper that excludes checks and credit cards from Article 4A’s coverage. In fact, General Motors’ instruction to its own bank to make the payment could and often will be in writing, but that would not keep this from being a funds transfer covered by 4A. It is for other reasons that the credit card and the check transaction fail to fall under Article 4A. The drafters of 4A intended to exclude from 4A check transactions, credit card transactions, most consumer point of sale and ATM transactions, and transactions outside of the banking system (e.g., Western Union). Article 4A is law designed to deal with known, widely practiced types of transactions. It is not law designed to show the way to a new mode of business now unknown.
- Consider another type of consumer transaction, one that seems to fit within Article 4A. Assume a consumer is standing at the checkout counter at Meijer Thrifty Acres using her debit card. By allowing her debit card to be run through the point of sale terminal, she sends an electronic message to her bank (the receiving bank) and instructs them to pay Meijer’s bank (the beneficiary’s bank). Unless one concludes that the use of Meijer’s point of sale terminal does not constitute a direct transmission to the receiving bank, this transaction appears to meet all of the tests of a payment order under 4A–103(a)(1). To say the transaction is not “direct” seems a quibble, for the point of sale terminal is merely an electronic terminal that happens to be located at the checkout counter and is not otherwise under the control of the beneficiary. What then excludes our consumer transaction from Article 4A? Nothing in 4A–103 or 4A–104. Rather section 4A–108 states flatly that this Article “does...
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Chapter 7. Buyer’s Remedies for Repudiation, for Nondelivery and for Failure to Deliver Conforming Goods (Which the Buyer Refused to Keep) Part 2 169 results (showing 5 best matches)
- The outlandish results produced by the failure of the courts to recognize substitute purchases were evident in common law times and continued under the Uniform Sales Act. See, e.g., Missouri Furnace Co. v. Cochran, 8 F. 463 (W.D.Pa.1881).
- “In the case of sale of wares to one in the business of reselling them, resale is one of the requirements of which the seller has reason to know within the meaning of subsection (2)(a).” § 2–715, Comment 6.
- (4) The provisions of this section are subject to contrary agreement of the parties and to the provisions of this Article on sale on approval (Section 2–327) and on effect of breach on risk of loss (Section 2–510).
- (1) A contract for sale imposes an obligation on each party that the other’s expectation of receiving due performance will not be impaired. When reasonable grounds for insecurity arise with respect to the performance of either party the other may demand adequate assurance of due performance and until he receives such assurance may if commercially reasonable suspend any performance for which he has not already received the agreed return.
- Peters, Remedies for Breach of Contracts Relating to the Sale of Goods Under the Uniform Commercial Code: A Roadmap for Article 2, 73 Yale L.J. 199, 256 (1963).
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Chapter 19. The Payor Bank and Its Customer 328 results (showing 5 best matches)
- See Summers, “Good Faith” in General Contract Law and the Sales Provisions of the Uniform Commercial Code, 54 Va.L.Rev. 195 (1968).
- Clause (3) implements the waiver of notice of dishonor authorized by 3–504(a)(iv) and thus reduces the bank’s duty under 3–503 and 3–505. The second sentence of the clause alters the rules of discharge on certification stated in 3–415(d) in the instance where the bank, as holder, procures certification. Clause (4) states the bank’s common law lien on items handled, a principle incorporated in large part by 4–210(a) and extended there to include the entire bank collection process. This particular contract goes beyond 4–210(a) in attaching “goods and securities” for which such items are drawn.
- Whether the customer can invoke section 2–302 on unconscionability is more doubtful. That section is part of Article 2 on sales of goods. Admittedly, courts have frequently applied 2–302 to security transactions but most of those cases also involved sales of goods. It may stretch the section too far to apply it to a bank-customer relationship. We conclude that 2–302 can be applied to Article 4 transactions only by analogy.
- the court held that in the absence of proof by payees of a property interest in the drawer’s funds, setoff is proper. Fleming Grain Company, Inc. was a middleman in the sale of grain that maintained an account and line of credit at Kansas State Bank and Trust. After Fleming had been experiencing financial difficulties for several months and was in default on several notes, KSBT was advised that Fleming’s principals had lost over one million dollars of Fleming’s assets by speculating in the commodity futures market. KSBT immediately seized all of the funds in the Fleming account and applied the money to Fleming’s indebtedness to the bank. As a result of the setoff, checks which Fleming had written to the plaintiffs, who were grain farmers and suppliers, were returned unpaid. At the time of setoff, 84 percent of all deposits to Fleming’s account at KSBT were proceeds of grain sales.
- We believe that 4–103 incorporates the standard principle that parties may not depart from legislative statements of public policy, that 4–403(a) is a statement of such a public policy and that the foregoing Comment is an indication that the Code drafters did not intend that banks should have the right to eliminate the practice of stopping payment.
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Chapter 10. Warranty Part 2 121 results (showing 5 best matches)
- See, e.g., Simpson v. Hyundai Motor America, Inc., 269 Ga.App. 199, 603 S.E.2d 723, 54 UCC2d 634 (2004) (implied warranty of merchantability covers only defects present at time of sale; when plaintiff drove car for more than 5,000 miles before she made any complaints, there was no breach of implied warranty of merchantability); Industrial Steel Service Center v. Praxair Distribution, Inc., 2004 WL 2005832, 54 UCC2d 871 (N.D.Ill.2004) (while implied warranty of merchantability requires that defects exist at the time of sale, it is not required that they be discovered at time of sale; a gap between sale and discovery does not defeat a claim for breach of implied warranty of merchantability when buyer alleges goods were defective when sold).
- Moss v. Gardner, 228 Ark. 828, 310 S.W.2d 491 (1958). In applying § 71 of the Uniform Sales Act, the Arkansas court held that the description “hay baler” in a sales contract did not constitute an express warranty that the hay baler could bale hay because express warranties in the contract excluded all other warranties.
- Nat’l Conference of Commissioners of Uniform State Law, Amendments to Uniform Commercial Code Article 2—Sales 70 (Draft, Aug. 10, 2001) (proposing changes to U.C.C. 2–314, cmt. 7). See further, J. White & R. Summers, Revised Article 1 and Amended Article 2—Substance and Process—Supplement to Accompany Uniform Commercial Code, Practitioner Treatise Series, vols. 1–4, sec. 4–5 (West Group 2005). See also, James J. White, Reverberations from the Collision of Tort and Warranty, 53 S.C.L.R. 1067, 1072–75 (2002).
- As previously noted, the extent to which prior law was changed by 2–313 (and Comment 3 to 2–313) is unclear. Some courts have held that reliance on the seller’s affirmations by the buyer is not required for an express warranty to arise. See, e.g., Hawkins Constr. Co. v. Matthews Co., Inc., 190 Neb. 546, 209 N.W.2d 643, 12 UCC 1013 (1973) (sale of scaffolding; express warranty even though buyer did not rely on statements in seller’s brochure); Martin v. American Med. Sys., Inc., 116 F.3d 102, 32 UCC2d 1101 (4th Cir.1997) (Virginia UCC variation does not require plaintiff to show reliance on defendant’s representations in a breach of warranty case involving personal injury; court held “any description of the goods, other than the seller’s mere opinion about the product constitutes part of the basis of the basis of the bargain and is therefore an express warranty. It is unnecessary that the buyer actually rely upon it.”).
- See Stephenson v. Frazier, 399 N.E.2d 794, 28 UCC 12 (Ind.App.1980), transfer den., 425 N.E.2d 73 (1981) (Code applied to sale of a modular home, but not to construction of foundation and installation of septic system).
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Preface—Fourth Edition 5 results
- This one volume version of our 4th edition is mainly for law students confronting the Uniform Commercial Code. Accordingly, we have not footnoted this version nearly as fully as we have our four volume version. We have also narrowed our focus; here we address mainly general concepts and principles of the Code, its basic structure, and the relations of part to part and of part to whole. We have discussed illustrative case law as well. This provides the student with a basis for specific understanding and adds concrete flavor to the generalized Code text. We have also discussed the basic policies that lie behind numerous Code articles and sections. An understanding of these greatly facilitates student grasp of the technical intricacies and structural interrelations of Code sections and Articles.
- Above all, we have tried to provide concise yet systematic overall discussions of the parts of Code Articles that we think to be of most significance for the law student. Most of our discussions coincide substantially with typical classroom coverage of the relevant Code Articles.
- Experience indicates that the student who has used this one volume work in law school courses will find it easy to make efficient use of the much larger four volume version of this treatise in practice, a skill that stands the student in good stead, given that the longer version of the treatise has been often cited by the courts.
- In some areas, e.g., certain aspects of electronic fund transfers under new Article 4A, the finance lease under Article 2A, various letter of credit doctrines under Article 5, and defenses of the account debtor under section 9–318, we refer the exceptionally industrious or innately omnivorous student to the much more extensive treatment provided in our four volume edition.
- In numerous places we address recent actual or proposed revisions of the Code. Thus, for example, in the chapters on buyers’ and sellers’ remedies and Article 9 we have alluded to or treated various proposals for change now being considered. In the sections on Articles 1, 3, 4, 4A, and 5, we deal extensively with revisions recently adopted by the sponsors of the Uniform Commercial Code. Some of those revisions, such as Article 4A, have been adopted by all the states. Others, such as Article 5, are just entering the adoption process, and yet others, such as Article 2A and the revisions to Articles 3 and 4, have been adopted by more than half of the states.
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Chapter 14. The Negotiable Instrument 399 results (showing 5 best matches)
- Does section 3–118(g) apply to claims pursuant to the underlying obligation (for which a check or note is given)? Section 3–118(g) applies to an “obligation arising under this Article.” But the underlying obligation does not “arise” under Article 3 and is therefore subject to the statute of limitations in Article 2 on the sale of goods or in the common law of a particular state, not to 3–118. We believe that the same is not true of a conversion cause of action under section 3–420, even though that section begins with the sentence: “The law applicable to conversion of personal property applies to instruments.” In our view, the rights on conversion of the instrument arise under “this Article” and thus, are covered by 3–118(g).
- (a) If an indorsement is made by the holder of an instrument, whether payable to an identified person or payable to bearer, and the indorsement identifies a person to whom it makes the instrument payable, it is a “special indorsement.” When specially indorsed, an instrument becomes payable to the identified person and may be negotiated only by the indorsement of that person. The principles stated in Section 3–110 apply to special indorsements.
- (g) Under subsection (e) or (f), impairing value of an interest in collateral includes (i) failure to obtain or maintain perfection or recordation of the interest in collateral, (ii) release of collateral without substitution of collateral of equal value, (iii) failure to perform a duty to preserve the value of collateral owed, under Article 9 or other law, to a debtor or surety or other person secondarily liable, or (iv) failure to comply with applicable law in disposing of collateral.
- When does the cause of action accrue? On the “event,” or on plaintiff’s notice or discovery of the event? Section 3–417(f) states that the cause of action for breach of warranty accrues “when the claimant has reason to know of the breach.” On the other hand, section 2–725 on sale of goods embraces the time of the breach, not the time of discovery. Beyond the cases specifically covered by 3–416(d) and 3–417(f), reasonable people can differ about the meaning of “accrues.” We prefer the time of the events giving rise to liability, not the time such events are discovered. Many courts adopt this rule (i.e., that the discovery rule does not apply unless the defendant fraudulently concealed the transaction so as to prevent its discovery by the plaintiff).
- The section was criticized as confusing and complicated because it introduced the law of suretyship into negotiable instruments. 1 N.Y. State Law Revision Comm’n, 1954 Report 208–209, 428 (1954). Professors Sutherland, Mentschikoff, and Gilmore responded that the section merely codified prior law and that the obligation of an accommodation party could not be understood as other than a suretyship obligation. . at 253, 274, 461 (1954); Vol. 2, 1954 Report at 1168 (1954). The original language of the statute and the comment were deleted and the old § 3–415(1) substituted as the result of the debate before the New York Law Revision Commission. Perm.Ed.Bd. for UCC, 1956 Recommendations 113 (1956).
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Chapter 21. Letters of Credit 453 results (showing 5 best matches)
- The section balances the claimant’s right to subrogation and the letter of credit independence principle by precluding any defenses or rights until after payment is made under the letter of credit. This is critical, as one of the key justifications for disregarding the independence principle under these circumstances is that there is no reason to apply the principle once its primary objective (that the beneficiary be paid quickly) is met by the issuer’s honor.
- However, it is the very essence of a sales contract that at least minimum adequate remedies be available. If the parties intend to conclude a contract for sale within this Article they must accept the legal consequence that there be at least a fair quantum of remedy for breach of the obligations or duties outlined in the contract. * * *
- Beverly Hills responded by citing the independence principle, and claimed that the letter of credit agreement with Western Security was separate from its mortgage contract with Vista. The California Court of Appeals found for Vista and allowed Western to refuse to honor Beverly Hills’ presentment. Before the case could be appealed to the California Supreme Court, the state legislature quickly amended the law to abrogate the Court of Appeals decision. The California Supreme Court then remanded the case for consideration under the new law. The Court of Appeals upheld its earlier ruling, holding that the new law did not apply retroactively. Another appeal to the Supreme Court resulted in the final disposition, with the high state court holding that the new law did apply retroactively and requiring that Western Security honor Beverly Hills’ presentment.
- For several reasons we believe it should be an unusual case in which the applicant successfully recovers from the issuing bank for wrongful honor under 5–108. In the usual case the bank’s bias and its selfish interest run exclusively toward dishonor. In the normal case the issuer’s most obvious and intense interest will be in its applicant as against a diffuse and remote interest in the integrity of the letter of credit system. If we are to preserve the independence principle and bolster the utility of letters of credit, the law must encourage banks to act in a relatively disinterested way, namely to pay. Moreover, one should have some sympathy for the bank in this position. The bank earns only a small fee, has a limited amount of time to make a decision and, at least when it acts in good faith, courts should be sympathetic to its judgment about beneficiary’s compliance with the credit.
- Following the UCP, section 5–108(g) directs the issuer to disregard nondocumentary conditions. The comments to 5–108(g) and 5–102 differentiate between fundamental nondocumentary conditions and conditions which are not fundamental. If the letter is premised on a fundamental nondocumentary condition, then it is not a letter of credit, and ordinary principles of contract law should apply to the transaction because it is completely outside Article 5. If the nondocumentary conditions are not fundamental, then those conditions should be disregarded. If a letter of credit provided that the issuer should pay upon “applicant’s default in the underlying contract,” that would not be a nondocumentary condition that would be so substantial that the undertaking would not constitute a letter of credit and would not be governed by Article 5. Comment 6 to 5–102 also clarifies this issue:
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Chapter 15. The Holder in Due Course 296 results (showing 5 best matches)
- If the underlying transaction involves a sale of services and not goods, Article 2 does not govern the transaction. Typically the common law of contract will give the right to stop paying entirely only if there is a material breach. Otherwise the buyer will be left in the same circumstances as one who had not rejected. He will probably have a right to set off an amount equal to the damages he has suffered but will have to pay the rest of the price.
- A final preliminary, probably insignificant limitation upon the rule, is that it applies only when “credit” is granted. By use of the words “purchase money loan” and “financing a sale,” the rule incorporates the doctrine set out in the Truth in Lending law Several cases under the law have raised serious and interesting questions as to whether certain kinds of installment contracts are in fact credit contracts or whether, since the debtor prepays in some of those, there is no extension of credit by the seller. For example, where the buyer is to receive goods or services in installments and where he pays before he receives such performance by the seller, there is arguably no credit granted by the seller. In any case, the basic transaction reached by the rule is one in which the seller writes paper and sells it to a creditor.
- Financing a sale.
- of consumer includes only the acquisition of “goods or services”; it thus includes contracts for the use of health spas (presumably as a service) and time payment contracts for schools, but it does not include contracts for the sale of real property. One might argue that a contract for the use of a health spa is a contract for the use of real property; however, it is certain that the FTC would take the position that the contract was for the sale of services, and it seems likely that the FTC would win.
- The meaning of 3–302(c)(i) is clear on its face, as is that of 3–302(c)(iii). Subsection 3–302(c)(ii) is not as plain: it does not simply refer to unusually large sales. Rather, it concerns the transfer in bulk of the assets of one entity to another. According to Comment 5 to section 3–302:
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Preface—Fifth Edition 2 results
- The principal changes in this one volume edition from its 4th edition predecessor are the revisions of chapter 20 on letters of credit, and of chapters 21–25 on Article Nine. Chapters 21–25 deal exclusively with the 1999 version of Article 9. In that version, the drafters changed a large share of the words, changed the numbers of the sections, and modified and added a variety of legal rules and principles. We thought it better to start with a clean slate and so we have not attempted to explain each change from the pre–1999 Article 9 to the 1999 version. Those still handling cases or having concerns under the pre–1999 version of Article 9 should consult the multi-volume 4th edition for practitioners, including the updated pocket-parts. For practitioners, we will in the year 2000 or 2001, provide a more extensive consideration of the changes from pre to post 1999, and will fully integrate the case law with the new versions of Code Articles. In the meantime, students and practitioners...
- In this edition, as in our former editions, we attempt to provide a systematic discussion of the Code. This book, of course, is designed mainly for the law student not the practitioner, but one familiar with the book in law school can make an easy transition to the four volume treatise for practice. Here as in the former editions of the one volume version, we give only minimal citations, just enough to enable the reader to understand the kinds of cases that might be presented under particular provisions of the Code.
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Chapter 16. Basic Liability Arising From Stolen Instruments and Forged Signatures 179 results (showing 5 best matches)
- plaintiff entered into an agreement which provided that a third party would act as a sales representative for its products in exchange for a commission. Customers made five (5) checks payable to plaintiff for product purchases and the third party improperly indorsed and deposited them in its account. Another customer of plaintiff gave a check to the third party naming it as the payee. Judgment creditor of the third party attempted to garnish its commissions; plaintiff defended by attempting to set off the value of the checks that the third party allegedly converted. Regardless of the fact that the third party was designated an “independent contractor” in the sales agreement, it was acting as plaintiff’s special agent for the limited purpose of receiving customer payments and forwarding them to plaintiff. Because the checks were delivered to plaintiff’s agent, plaintiff could maintain a cause of action in conversion and the amount stolen could be deducted from the commissions owed....
- Section 3–420’s opening sentence incorporates common law conversion: “The law applicable to conversion of personal property applies to instruments.” It is conceivable, therefore, that the law of Minnesota or New York or Florida might make one guilty of conversion for dealing with an instrument in ways not described by the statutory definition (second sentence). When that is so, there will be liability under the common law introduced into Article 3 by the first sentence of 3–420.
- Has bank also converted? In most of those cases the transfer would be a “negotiation” and therefore would not violate the second sentence of 3–420(a), but the act could violate the common law incorporated by the first sentence. Since the second sentence is supplementary (an instrument is “ ” converted), that an act is not a conversion under the second sentence does not imply freedom from common law liability. As we indicate in Chapter 17 in the discussion concerning 3–405 and 3–406, the conclusion that a bank might be guilty of conversion when it pays over an unforged, but unauthorized signature may seriously disrupt the loss allocation scheme that depends on the comparative negligence rules in 3–404 et seq. None of the revised sections deals with unauthorized signatures unless those signatures are forgeries. Therefore, as we indicate below, one set of events arising out of a series of signatures that are held to be “forgeries” will lead to an allocation scheme that depends heavily...of
- preserve the finality principle in , placing the loss on the drawee bank absent negligence of the customer. Under Reg. CC and the 2002 Code, the rule of does not apply to remotely created checks that have been forged or materially altered. The drawee bank can put the loss back upstream and ultimately to the bank of first deposit. The new federal warranty and the 2002 Code’s section 3–417 represent a step back from and are consistent with the policy goal of placing the burden on the party that is in the best position to avoid the loss. Note that the bank of first deposit cannot sue the depositor, e.g., a telemarketer, because the warranty does not run from a depositor to a depositary bank. However, the bank of first deposit can, by contract, protect itself against the risk of bearing all the loss. The Federal Rule will hopefully help the 2002 Code gain acceptance.
- The transfer warranty of Article 4 (4–207) concerning bank deposits and collections contains language virtually identical to that quoted from 3–416. This “other state law” that Comment 6 refers to will generally incorporate the “American Rule” that prohibits attorneys’ fees in the absence of contract or a special statute. For example, in E.S.P., Inc. v. Midway National Bank, the payee of a check that had been paid with a forged indorsement sued the drawee bank for conversion. The drawee bank in turn sued the depositary bank upstream on a breach of warranty theory under 4–207. The drawee bank attempted to recover all of its attorneys’ fees from the collecting bank. The court allowed the drawee bank’s attorneys’ fees for defending the conversion action brought by the payee, because it found statutory authority for that under 4–207. It disallowed the drawee bank’s attorneys’ fees for its indemnification action against the collecting bank. When the cause of action directly benefits the...
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Preface—Second Edition 4 results
- In addition, we have remedied some omissions in the first edition. For example, we now treat 2–403 on title to goods and the shelter principle, and 2–615 on the defense of failure of presupposed conditions.
- The first edition appeared in late 1972. Since then, the 1972 Official Text of the Uniform Commercial Code (with its extensive revisions of Article Nine) has become law in nearly thirty states; there has been a vast accumulation of new case law (very largely under the 1962 Official Text); the Bankruptcy Reform Act of 1978 has been enacted; and still other changes have occurred, including the adoption of new federal law dealing with warranties, with the rights of a holder in due course, and with electronic funds transfer. In this new edition we take account of all the foregoing developments.
- We closed the preface to our first edition with these words: “So here it is. We hope it helps.” Cites in judicial opinions and other evidence of lawyer and student use indicate that the first edition has been of some help. Perhaps then, the new version also has a future. We hope so. In our view, it is a better book.
- We explained our philosophy of treatise writing in the preface to the first edition. Those interested may consult that preface, reproduced at p. xxv, infra.
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Chapter 21. Letters of Credit Part 2 61 results (showing 5 best matches)
- Backus, Foreign Loans, Letters of Credit and Conflict of Laws, 73 Banking L.J. 85 (1956); Funk, Letters of Credit: UCC Article Five and the Uniform Customs and Practice, 11 Howard L.J. 88 (1965); Gewolb, The Law Applicable to International Letters of Credit, 11 Vill.L.Rev. 742 (1966); Note, The Conflicts of Law in International Letters of Credit, 24 Va.J.Int’l Law 171 (1983).
- See Harfield, Identity Crisis in Letter of Credit Law, 24 Ariz.L.Rev. 239, 246–8 (1982); Dolan, The Law of Letters of Credit: Commercial and Standby Credits, Para. 10.02[3], [4] (rev. ed. 2003).
- Gewolb, The Law Applicable to International Letters of Credit, 11 Vill.L.Rev. 742, 753 (1966). See also Bergsten, A New Regime for International Independent Guarantees and Standby Letters of Credit: The UNCITRAL Draft Convention on Guaranty Letters, 27 Int’l Law. 859 (1993)(discusses choice of law provision in UNCITRAL Draft Convention on Guaranty Letters).
- The leading treatise on letters of credit today is Dolan, The Law of Letters of Credit: Commercial and Standby Credits (rev. ed. 2003).
- See Dolan, The Law of Letters of Credit: Commercial and Standby Credits, Para. 9.03[1][a](rev. ed. 2003) “The strict compliance standard recognizes the unique nature of credits; the substantial compliance standard recognizes that the credit application is just another contract.”
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Westlaw Appendix 127 results (showing 5 best matches)
- Guide to the International Sale of Goods Convention
- To retrieve cases classified under more than one topic and key number, search for your terms in the topic field. For example, to retrieve federal cases discussing bills of lading, which may contain headnotes classified to Carriers (70), Evidence (157), Sales (343), or Shipping (354), access the FCML–CS database and type a query like the following:
- provides a strong base for analyzing even the most complex problems involving issues related to commercial law. Whether your research requires examination of case law, statutes, administrative materials, or expert commentary, West books and Westlaw are excellent sources of information.
- Suppose one of the cases you retrieve in your case law research is 252 F.3d 1039 (9th Cir. 2001). You want to make sure it is good law and retrieve a list of citing references.
- One of the easiest ways to follow recent developments in commercial law is to access the Westlaw Topical Highlights–Commercial Law database (WTH–CML). The WTH–CML database contains summaries of recent legal developments, including court decisions, legislation, and materials released by administrative agencies. When you access WTH–CML, you automatically retrieve a list of documents added to the database in the last two weeks.
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Acknowledgments—Sixth Edition 2 results
- Professor White acknowledges the assistance of Michael A. Zellen, ’07 and Mark R. Christy, ’10, University of Michigan Law School, Christine Lee, ’10, Cornell Law School and the patience and thoroughness of his administrative assistant, Janis Weston.
- Professor Summers acknowledges the invaluable assistance of Christine Lee, ’10, Cornell Law School and his assistant, Gina Jackson.
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Acknowledgments—Fourth Edition 6 results (showing 5 best matches)
- Professor Summers also expresses his gratitude to his two secretaries during the period of work on the fourth edition: Mrs. Sandra Markham, and Mrs. Pamela Finnigan. In addition, he records his thanks to Dean Russell Osgood, Mr. Richard F. Robinson, Mrs. June M. Morehouse and others of the Cornell Law School who generously arranged for the provision of material and other support. Professor Summers also thanks Claire M. Germain, the Edward Cornell Law Librarian and Professor of Law, and also Mr. John Hasko, Associate Law Librarian, for fine library support.
- Professor Summers gratefully acknowledges the helpful efforts of the following students at Cornell Law School each of whom provided assistance in the preparation of the fourth edition: John H. Chun ’94, Karen E. Slagle ’94, M. Todd Sullivan ’94, Charles E. C. Hood ’95, Diane Joyce Stoeberl ’95, James E. Hannon, Jr. ’96, Eric R. Jacobs ’96, Mathew A. Michaels ’97, and Donald T. Stepka ’97.
- Professors Summers and White also gratefully acknowledge the special efforts of Elizabeth Anne Summers, of the Oregon and New York bars, who provided various forms of valuable assistance in the preparation of this edition.
- Between the publication of the third and fourth editions, two major figures at West Publishing Company retired: Roger Noreen and Tom Berreman. Over the years, they (and others at West including especially Pat Sparks) have been most helpful to the authors of this treatise in countless ways. We salute both on their retirement, and record here a deep sense of indebtedness, gratitude, and friendship.
- Finally, Professor Summers is most grateful to his wife, Dorothy Kopp Summers, for many forms of support and assistance, direct and indirect, on this and all prior editions of this treatise.
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Chapter 17. Reallocation of Loss Because of Fault 219 results (showing 5 best matches)
- We find the drawee’s argument persuasive, but how would one arrive at the correct conclusion under the law as it stands? One possibility is to find a common law cause of action in the drawee against the depositary bank for a proper share of the loss (for the moment we have put aside the question “what is a proper share”). This is a crude way to arrive at a fair result. It is somewhat distasteful, however, to contemplate that we already have to start engrafting common law causes of action onto a newly drafted statute in order to arrive at fair results. While 3–406(b) gives the drawer an implied cause of action in negligence (to allocate the losses between the drawer and the depositary or drawee bank), there is no suggestion that it also confers an implied cause of action in negligence on the drawee against either of the other parties.
- Whether the cause of action is considered to be in conversion, common law negligence, or something else might make a difference. First, a suit under 3–420 in conversion would be subject to the three-year statute of limitation in section 3–118. Second, the recovery in the conversion cause of action, but not in the negligence cause of action, would be limited by 3–420(b). Third, the array of affirmative defenses—depending upon the corporation’s own negligence and liability under 3–404, 3–405, and 3–406—might be different in a conversion cause of action than in a common law negligence cause of action. Moreover, even if the cause of action is in conversion, the cause of action contemplated in 3–307 may not depend upon the presence of an unauthorized signature and may, as we suggest below, be completely untouched by sections 3–404, 3–405, and 3–406.
- To understand this, return now to the case in which the embezzler, with authority to draw, draws a check payable to the order of the corporation, forges the corporate indorsement (he or she has no authority to indorse) and passes the check to a depositary bank. The corporate owner of the account upon discovery of the embezzlement sues the depositary and drawee banks in conversion. Those banks defend on the ground that the forged indorsement is “effective” under 3–404(b)(2) and therefore they have no liability under 3–420 or 4–401 for taking or paying a check bearing a forged indorsement. The owner of the account then responds that his or her conversion cause of action does not depend upon the presence of a forged indorsement, but that, as invited by 3–420, he or she is using the “law applicable to conversion of personal property” in the common law and that this claim to the instrument is implicitly recognized by 3–307(b). The owner of the account might strengthen this case by noting...
- Unauthorized signature is a broader concept that includes not only forgery but also the signature of an agent which does not bind the principal under the law of agency.
- One can extract some ideas from the cases that have addressed this issue, but even the most generous would not call them principles. First, it may be negligent not to have one’s books audited. Second, it may be negligence not to follow general business practices of organizations of similar size and sophistication. One might suppose it is always a bad business practice in an organization with more than a few employees to have disbursements made by the same employee who also reconciles cancelled checks with the bank statement. In some cases, courts have said that an employer who fails to inquire into an employee’s references has been negligent. Not surprisingly, signing blank checks is negligent. Additionally, a party who sets up procedural safeguards and then fails to follow them may be in hotter water than one who has no procedures at all. Of course, what is good for the goose is not necessarily good for the duck. We suspect that the two employee nonprofit corporation that runs the...
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Acknowledgments—Second Edition 4 results
- Professor Summers also wishes to acknowledge his indebtedness to Mrs. Ann B. Pendleton, head of the Cornell Law School Secretarial Staff, Mrs. Kerry Boisvert, and Ms. Genie Hurme for secretarial and other assistance. In addition, Professor Summers wishes to express sincere thanks to Professor Jane L. Hammond, Alan Diefenbach, and Robert Oakley of the Cornell Law Library. Finally, an expression of deep gratitude is due Roger C. Cramton, Dean of the Cornell Law School, for his encouragement and support of this two year revision project.
- Both Professor White and Professor Summers wish to record special gratitude to Mr. Stephen L. Goodman and Mr. Frederick A. Scheibe, Cornell Law School Class of 1980, for their exceptional efforts overall and in particular for their splendid assistance with the process of seeing the manuscript through to press.
- Professor White gratefully acknowledges the work of each of the following students at the University of Michigan Law School, George I. Brandon, Stephen L. Gillan, John V. Lonsberg, and Gordon Nichols. In addition Professor White acknowledges his indebtedness to Mrs. Arline L. Howe, for secretarial services and to Ms. Judith A. Kerr for secretarial services and assistance in the preparation of the Index.
- Professor Summers gratefully acknowledges the efforts and dedication of the following students at Cornell University School of Law, each of whom contributed significantly to the preparation of this book: Dan T. Coenen, ’78, Albert J. Givray, ’78, Stephen L. Goodman, ’80, Leigh B. Kelley, ’80, John H. McKeon, Jr., ’79, Madelyn N. Morris, ’81, Thomas C. Newman, ’79, Mari– Anne Pisarri, ’80, and Frederick A. Scheibe, ’80. Special thanks are also due Madelyn N. Morris for performance of technical chores on the final manuscript.
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Preface—First Edition 5 results
- The libraries include many one-volume treatises that answer all the questions no one ever asks and answer none of the questions that everyone asks. And some pages of treatises in statutory fields offer little beyond statutory paraphrase. Further, while in our system statutory law tends to be transformed into case law, the treatises often relegate cases to footnote status. At least we have done our work on this book mindful of these flaws; only the readers can say whether we have avoided them ourselves. Of course, a treatise on the Uniform Commercial Code must lay out basic content and collect and analyze the rapidly growing case law. We have, as well, sought to identify and treat real questions, and have forced ourselves to take positions on some important issues as yet unresolved in the cases.
- This book is designed for two audiences, law students and practitioners. To a certain extent those audiences have different needs. For example, we include footnotes plump with citations for the practitioner; and for student and practitioner alike we offer our best effort at exposition of the law. Doubtless the experienced practitioner and the advanced student will find some of our exposition too elemental, and the beginning student will surely find some of it too complex. We console ourselves that treatise writers who try to do only a thousand pages on a body of law as large as the Uniform Commercial Code must and should make compromises. Certainly it would have been unwise to treat on the exciting frontier questions. And it would have been similarly unwise to dwell only on what is basic.
- We do not treat pre-Code case law to any significant extent, a decision forced on us by limitations of space and time. Certainly it is not our view that the Code displaces all pre-Code cases.
- As the table of contents will disclose, the book is organized in the same fashion as the Code and proceeds through the Articles from first to last. We have omitted consideration of one Article (Article 8); we have made relatively short work of others (Articles 4, 5 and 6), and have dealt in a comparatively generous way with several (Articles 2, 3 and 9). We have strayed, too, into adjoining law as relevant (mainly the Bankruptcy Act and the Federal Bills of Lading Act). We believe we have concentrated our efforts in ways that reflect not only the student’s but also the lawyer’s needs. For example, most lawyers can practice in relative ignorance of Article 8 without fear of a malpractice suit, but the same is not at all true with respect to Article 9. To the extent our guesses are incorrect we hope to hear from our readers.
- A final word about our collaboration. One of us was in a position to do more on the book than the other. That other felt the order of the authors’ names should reflect this fact, and was insistent. But, (a few differences over policy aside) the authors are jointly and severally liable for any and all blunders, mistakes, or other deficiencies. Each went over the work of the other, and there were numerous discussions and meetings (not wholly without refreshment). So here it is. We hope it helps.
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Acknowledgments—Fifth Edition 2 results
- Professor White wishes to thank Joddie Suddeth, ’00 and Betsy Burns, ’00, both of the University of South Carolina Law School, and most of all, Kiki Purkayastha, ’01, University of Michigan Law School. He also thanks Janis Proctor who, during the summer of 1999, did the secretarial work on chapters 21–25 and who, with difficulty, suppressed her aggravation at the many inefficiencies in dealing with confused academics.
- Professor Summers gratefully acknowledges the assistance of his administrative assistant, Mrs. Pamela Finnigan, and of his research assistants: Zoe Bikos, ’00, Marissa Holob, ’00, Ian Johnson, ’00, and Lisa Shrayer, ’01, all of the Cornell Law School.
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Acknowledgments—First Edition 5 results
- A. Haueisen, and Miss Susan Capogrossi of the Cornell Law School Secretarial Staff. In addition, Professor Summers wishes to express his sincere thanks to Professor Harry Bitner, Cornell Law Librarian, and to librarians Alan Diefenbach and Robert Oakley. Finally, an expression of profound gratitude is due W. Ray Forrester, Dean of the Cornell Law School, for his encouragement and support throughout this three year project. It has indeed been a privilege and a pleasure to work on books in the atmosphere prevailing during his deanship.
- Professor Summers gratefully acknowledges the dedication, skill and effort of the following students of the Cornell University School of Law, each of whom contributed significantly to the preparation of this book: James A. DeMent, Jr., ’72, Robert A. Hillman, ’72, Derek W. Hunt, ’72, Charles M. Adelman, ’73, and Kelly T. Hynes, ’73. Professor Summers also wishes to record his indebtedness and gratitude to Mrs. Ann B. Pendleton, head of the Cornell Law School Secretarial Staff and to Mrs. Jylanda Diles, Mrs. Barbara
- Both Professor White and Professor Summers wish to express special gratitude to Mr. James A. DeMent, Jr., Cornell Law School, Class of 1972. Mr. DeMent performed yeoman service throughout, and took on a great many of the technical chores involved in preparing the final manuscript for the printer.
- Professor White gratefully acknowledges the dedication, skill and effort of the following students at the University of Michigan Law School, each of whom contributed significantly to the preparation of this book: Ron Brot, ’71, Bruce Chadwick, ’72, Mike Huotari, ’72, Gale Miller, ’71, Dick McCarthy, ’71, George McKeegan, ’72, Gary McRay, ’72, Susan Wright, ’71, Gretchen Steadry, ’73 and Robert A. Rowan, ’73.
- Professor White also gratefully acknowledges the superhuman effort of First–Sergeant Kathie Cohn.
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Acknowledgments—Third Edition 5 results
- Professor White wishes to thank Tim Callahan, Michael Carowitz, Carol Jizmejian, Melissa McKenney, David Thottengal, and Richard Ziegler of the University of Michigan Law Class of 1988, and Deborah Canning and John Phillips of the Class of 1989 for their research assistance.
- Professor Summers also wishes to acknowledge his special indebtedness to Ms. Anna Tileston and Mr. Harry Dutton, word processors and assistants at the Cornell Law School who prepared most of the final manuscript for transmission to the publisher. Their efforts were heroic, and will not be forgotten. In addition, Professor Summers wishes to thank Mr. John Hasko and Mr. Bruce Kennedy of the Cornell Law School library staff for valuable assistance.
- Both Professor Summers and Professor White wish also to record here their gratitude to Mr. Al Givray, Cornell Law School Class of 1978 and Partner, Doerner, Stuart, Saunders, Daniel and Anderson in Tulsa, Oklahoma, for his assistance with the materials on letters of credit and with section 9–103 dealing with perfection in multi-state transactions.
- Professor Summers gratefully acknowledges the dedicated efforts of the following students at Cornell University Law School each of whom provided valuable assistance in the preparation of this book: Andrew McGaan ’86, Jonathan Wood ’86, John Held ’87, Charles Eberhardt ’87, Jay Smith ’87, Candace Ridgeway ’87, Harry Davis ’88, Kathryn Moore ’88, Alan Pasternack ’88, Douglas Perry ’88, Joe Buonanno ’89, Howard Koh ’89, John Moustakas ’89, Kathryn Murtagh ’89, Lorey Rives ’89, Harry Tilis ’89, Wayne Boatwright ’90 and Karen Streisfeld ’90. Without the assistance of the foregoing students, mainly in checking citations both for form and substance at the proof stages, this work simply could not have been completed on schedule.
- Both Professor White and Professor Summers wish to record their special indebtedness to John Held, Cornell ’87, and Harry Davis, Cornell ’88, for special editorial assistance, and Lorey Rives, Cornell ’89, for special work on the citations in the final manuscript, and, most of all, to Kathryn West for innumerable editorial jobs not the least of which is composing the index.
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Title Page 2 results
Copyright Page 2 results
- Thomson Reuters created this publication to provide you with accurate and authoritative information concerning the subject matter covered. However, this publication was not necessarily prepared by persons licensed to practice law in a particular jurisdiction. Thomson Reuters does not render legal or other professional advice, and this publication is not a substitute for the advice of an attorney. If you require legal or other expert advice, you should seek the services of a competent attorney or other professional.
- Printed in the United States of America
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Preface—Sixth Edition 2 results
- As with prior editions, this book is aimed mostly at the students, not the practitioners. One who uses this book in law school will have an easy transition to the 4–volume Treatise for use in practice.
- We have substantially changed the Sixth edition from its prior versions. In the Sixth edition we have omitted many of the citations that were included in the footnotes in the earlier versions. In some of the chapters we have added examples in the forms of questions and answers, and, of course, we have updated the substance.
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- Publication Date: January 20th, 2010
- ISBN: 9780314926692
- Subject: Commercial Law
- Series: Hornbooks
- Type: Hornbook Treatises
- Description: This book will give students a rigorous introduction to the Uniform Commercial Code without burdening them with needless citations. The new edition deals not only with the 1999 revisions to Article 9 but also with the recent revisions to Article 1. This edition also addresses the earlier revisions to Articles 5, 3, and 4. It has limited coverage of the failed attempt to revise Article 2.
