Uniform Commercial Code
Authors:
White, James J. / Summers, Robert S.
Edition:
6th
Copyright Date:
2010
37 chapters
have results for payment systems
Chapter 20. Electronic Funds Transfers Part 2 243 results (showing 5 best matches)
- If a payment order addressed to a receiving bank is transmitted to a funds-transfer system or other third-party communication system for transmittal to the bank, the system is deemed to be an agent of the sender for the purpose of transmitting the payment order to the bank. If there is a discrepancy between the terms of the payment order transmitted to the system and the terms of the payment order transmitted by the system to the bank, the terms of the payment order of the sender are those transmitted by the system. This section does not apply to a funds-transfer system of the Federal Reserve Banks.
- (d) A funds-transfer system rule may provide that payments made to beneficiaries of funds transfers made through the system are provisional until receipt of payment by the beneficiary’s bank of the payment order it accepted. A beneficiary’s bank that makes a payment that is provisional under the rule is entitled to refund from the beneficiary if (i) the rule requires that both the beneficiary and the originator be given notice of the provisional nature of the payment before the funds transfer is initiated, (ii) the beneficiary, the beneficiary’s bank and the originator’s bank agreed to be bound by the rule, and (iii) the beneficiary’s bank did not receive payment of the payment order that it accepted. If the beneficiary is obliged to refund payment to the beneficiary’s bank, acceptance of the payment order by the beneficiary’s bank is nullified and no payment by the originator of the funds transfer to the beneficiary occurs under Section 4A–406.
- § 4A–203, Comment 7 also provides that the receiving bank is not entitled to enforce or retain payment of an unauthorized, but effective, payment order if the sender and receiving bank are members of a funds transfer system, and the funds transfer system varies the rights and obligations of the sender and receiving bank.
- (a) If, under this Article, a receiving bank is obliged to pay interest with respect to a payment order issued to the bank, the amount payable may be determined (i) by agreement of the sender and receiving bank, or (ii) by a funds-transfer system rule if the payment order is transmitted through a funds-transfer system.
- In many situations, a bank will be both the sender and the receiving bank of various payment orders. Section 4A–403(c) does not require that payment occur separately with respect to each payment order. Section 4A–403(c) specifically upholds private agreements between two banks to net bilaterally their payment orders. Section 4A–403(b) specifically authorizes multilateral netting among members of a funds transfer system and provides that settlement occurs in accordance with the rules of the funds transfer system.
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Chapter 20. Electronic Funds Transfers 232 results (showing 5 best matches)
- Finally, a “funds transfer system” is a “wire transfer network, automated clearing house, or other communication system of a clearing house or other association of banks through which a payment order by a bank may be transmitted to the bank to which the order is addressed.” A payment order need not pass through a funds transfer system to be an Article 4A transfer. It need not even be a wire transfer. An Article 4A funds transfer may be by any means. If a funds transfer does pass through a funds transfer system, some of the rights and obligations of the sender and receiving bank of the payment order will be defined by the rules of the funds transfer system. In most cases, the rules of Article 4A will defer to the applicable rules of a funds transfer system.
- Absent an express agreement or a funds transfer system rule, a receiving bank that is not a beneficiary’s bank can accept a payment order only by executing its own payment order. That is, such a receiving bank cannot accept a payment order by remaining silent. Therefore, a receiving bank that is not the beneficiary’s bank need not send notice of rejection of the payment order to the sender in order to reject the payment order. It can reject by inaction.
- In general, all types of EFTs share one common theme—they consist of an order by one person, typically to a bank or other financial institution, either to credit or charge the bank account of another person. The transaction is usually conducted between the banks by way of a system that is set up to handle such interbank transfers, although intrabank transfers that do not use such systems are also possible. Exactly which law, or, increasingly, which apply to a particular situation will depend on several factors: (1) whether the person making the payment is a consumer or a commercial party, (2) whether the payment is conducted as a traditional Article 4A funds transfer involving originating and beneficiary banks over Fedwire or another large wire transfer system, (3) whether the payment is classified as a “credit payment” or “debit payment,” and (4) which one of the available funds transfer systems is used to complete the transaction.
- As a brief illustration of how one transaction requires knowledge of a variety of different laws, consider 4A–403 (Payment By Sender to Receiving Bank). That section states that payment of the sender’s obligation can occur “when the receiving bank receives final settlement of the obligation through a Federal Reserve Bank or through a funds transfer system.” “Final settlement” occurs at the time specified by the rules of the Federal Reserve or by those of the funds transfer system. Thus to know when payment occurs under 4A–403, one must look not only at 4A but also at the rules of the funds transfer system used and at the Federal Reserve rules.
- Under 4A–209(b)(2), a beneficiary’s bank most frequently accepts by receiving final settlement of the obligation through the Federal Reserve Bank or through a funds transfer system. To settle through the Federal Reserve, both the sender of the payment order and the receiving bank (or their representatives) must maintain accounts at the Federal Reserve. To settle through a funds transfer system, both the sender and the receiving bank must be participants in the funds transfer system.
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Chapter 18. NSF Checks, Documentary Drafts, and Forged Checks: Liability of Payors and of Collecting Banks, Final Payment, Delay 115 results (showing 5 best matches)
- To see the confusion that might arise here, assume a payee presents a $100,000 check at the payor bank’s counter and takes away a teller’s check in payment. Alternatively assume the check is presented through the banking system and a teller’s check is sent back in settlement for the check presented. In the first case final payment has occurred at the bank’s counter under 4–215(a). The payor bank and the drawer are off the hook on the original check and the payee has to look to the liability on the teller’s check for payment. (In this case the payor would be the drawer of the teller’s check and so would have liability on that check.) In any event, there would have been final payment on the underlying check; liability on that check would have been discharged. That conclusion is stated explicitly in Comment 8 to 4–215: “However, if presentment of the item was over the counter for immediate payment, final payment has occurred under 4–215(a)(2).” That comment then goes on to note that...
- In determining whether a multi-branch bank should be treated as one or many banks, one might consider the form of communication among the branches. If every teller station in a system has an on-line computer that allows the teller instantaneous access to a customer’s balance maintained in a central computer memory, it is more logical to hold each branch to be part of one bank and to treat the payment as final. If, on the other hand, the teller at one branch has no ready means of determining the balance of any account at another branch, it is unfair to the bank to say that it has made final payment when one branch has paid cash on a check drawn on another branch. In the latter case the bank should have the right to charge back against its customer who received cash for a check which proves to be drawn against insufficient funds.
- In the other presentation—through the banking system and not over the counter—settlement occurs when the teller’s check is sent (under 4–213(a)(2)), but “final settlement” does not occur under 4–213(c) until 1) final payment on
- In addition to making final payment by delay, the payor bank can make final payment in several other ways. For example, it might pay the check over the counter in cash or it might give its own cashier’s check in return for the depositor’s check presented for payment. The consequences are the same whether the bank has missed the midnight deadline or made final payment in any of the other ways outlined in 4–215.
- Other claimed “mistakes” arise from the nature of the check processing system itself. Consider the case in which a check is presented, run through the bank’s machinery and paid by the passage of the midnight deadline without any conscious decision. This might be done because the drawer was a good customer and thus no attention was paid to the fact that the apparent balance in his account rose because of uncollected funds, or because the bank’s computer was not programmed to distinguish between collected and uncollected funds, or because the bank routinely allowed many customers to draw against uncollected funds even though the daily computer printout correctly showed the status of their accounts as lacking sufficient collected funds to support the payments. For reasons like those discussed above concerning kites, we do not believe that payments made in these circumstances are “mistaken.” In all of these cases, the payor bank has the capacity to determine which checks are drawn...
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Index 115 results (showing 5 best matches)
Chapter 14. The Negotiable Instrument 87 results (showing 5 best matches)
- To keep restrictive indorsements from clogging the flow of checks through the banking system, section 3–206 limits the effect of restrictive indorsements in several ways. An indorsement that seeks to limit payment to a particular person, such as “pay to John only,” or otherwise to prohibit further transfer or negotiation, is ineffective under section 3–206(a).
- (3) does not state any other undertaking or instruction by the person promising or ordering payment to do any act in addition to the payment of money, but the promise or order may contain (i) an undertaking or power to give, maintain, or protect collateral to secure payment, (ii) an authorization or power to the holder to confess judgment or realize on or dispose of collateral, or (iii) a waiver of the benefit of any law intended for the advantage or protection of an obligor.
- (1) Unless there is notice of breach of fiduciary duty as provided in Section 3–307, a person who purchases the instrument from the indorsee or takes the instrument from the indorsee for collection or payment may pay the proceeds of payment or the value given for the instrument to the indorsee without regard to whether the indorsee violates a fiduciary duty to the indorser.
- Protest is no longer mandatory and must be requested by the holder. Even if requested, protest is not a condition to liability of indorsers or drawers. Protest is a service provided by the banking system to establish that dishonor has occurred. Like other services provided by the banking system, it will be available if market incentives, inter-bank agreements, or governmental regulations require it, but liabilities of parties no longer rest on it. * * *
- Since no creditor will ordinarily extend a note’s maturity unless the debtor would have difficulty making current payments, we expect that the burden on the accommodation party to show not only “loss,” but also “its extent” will be hard to carry. As with all these cases, there is the possibility that the debtor will have two obligations to the creditor: one that is guaranteed and one that is not. When the creditor extends the guaranteed obligation but insists on the payment of the unguaranteed obligation, the courts are certain to listen closely to complaints from accommodation parties. Of course, insisting on payment of non-guaranteed obligations while extending guaranteed obligations is not alone evidence of bad faith. Indeed, if there is a reasonable prospect of payment in the future and a high likelihood the guarantor would have to fork money over if the debt were called at once, there will not be any injury to the accommodation party by the extension.
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Chapter 19. The Payor Bank and Its Customer 149 results (showing 5 best matches)
- Because of changes in the check process, the “no signature” cases are not as easy as they once were. To accommodate the explosive growth of checks, banks have automated almost all of the payment process. Except for random examination, most banks look at signatures only on checks above a fixed dollar amount. In truncation systems, the payor bank never receives the depositor’s checks and,
- Nevertheless, in cases decided prior to the 1990 amendment, drawers usually prevailed against banks in suits for payment over stop-payment orders containing erroneous information. Why should banks be liable for a payment made due to a customer’s mistake? The majority of courts rationalized the bank’s liability on the grounds that the customer, although mistaken in one essential piece of information, still provided sufficient correct information to afford the bank a reasonable opportunity to act. The case of Parr v. Security National Bank ...had a reasonable opportunity to act on Parr’s information should be determined in reference to the bank’s own procedures. An Oklahoma Appeals Court rejected the bank’s reasoning and found for Parr. According to the Oklahoma court, it seemed reasonable to require banks to accept reasonable information. Once the customer has provided such information, the Parr court stated, any loss because of the bank’s particular system should be on the bank....
- A customer may stop payment on “any item drawn on the customer’s account.” Since stop-payment orders are common only for checks, we consider the relevant rules only in reference to checks. A stop-payment order poses a variety of problems. Here we examine: (1) Who may issue a binding stop-payment order? (2) What form must a stop-payment order take? May it be oral? (3) How are the usual stop-payment order rules altered because a personal check is certified or because the check in question is a cashier’s or bank check? (4) What is the bank’s liability for failure to follow a binding stop-payment order? (We deal with this last question mostly in the following section for it inevitably turns on the question of subrogation of the bank to the presenter’s rights under 4–407.)
- Subsection 4–403(b) entitles the customer to stop payment orally. Although this provision caused unhappiness in the banking community, the Code drafters decided that banks should honor oral as well as written stop-payment orders. As we indicated in Section 6–2, we read 4–403(b) and comments as a statement of public policy and believe that a bank may not by contract deprive a customer of his right to stop payment orally. For the same reasons, we think courts should invalidate stop-payment order forms that completely exculpate banks for failure to follow stop-payment orders.
- The burden of establishing the fact and amount of loss resulting from the payment of an item contrary to a stop-payment order or order to close an account is on the customer. The loss from payment of an item contrary to a stop-payment order may include damages for dishonor of subsequent items under Section 4–402.
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Chapter 26. Default and Its Consequences 19 results (showing 5 best matches)
- Section 9–617(a) protects a good faith transferee at a foreclosure sale from claims to title by the debtor and by subordinate secured parties and lienors. This provision, carried forward from the old Code, is designed to maximize the payment a buyer is willing to make. Section 9–619 on the transfer of “record or legal title” is a new section to tie up loose ends in certificate of title cases and other cases where the collateral is subject to a registration system.
- As discussed more fully in Comment 3, a secondary obligor may receive a transfer of collateral in a disposition under section 9–610 in exchange for a payment that is applied against the secured obligation. However, a secondary obligor who pays and receives a transfer of collateral does not necessarily become subrogated to the rights of the secured party as contemplated by subsection (a)(3). Only to the extent the secondary obligor makes a payment in satisfaction of its secondary obligation would it become subrogated. To the extent its payment constitutes the price of the collateral in a section 9–610 disposition by the secured party, the secondary obligor would not be subrogated. Thus, if the amount paid by the secondary obligor for the collateral in a section 9–610 disposition is itself insufficient to discharge the secured obligation, but the secondary obligor makes an additional payment that satisfies the remaining balance, the secondary obligor would be subrogated to the secured...
- (b) [No surplus or deficiency in sales of certain rights to payment.] If the underlying transaction is a sale of accounts, chattel paper, payment intangibles, or promissory notes, the debtor is not entitled to any surplus, and the obligor is not liable for any deficiency.
- (59) “Obligor means a person that, with respect to an obligation secured by a security interest in or an agricultural lien on the collateral, (i) owes payment or other performance of the obligation, (ii) has provided property other than the collateral to secure payment or other performance of the obligation, or (iii) is otherwise accountable in whole or in part for payment or other performance of the obligation. The term does not include issuers or nominated persons under a letter of credit.”
- In the case of non-notification lending, section 9–607 gives the secured creditor the right to notify the account debtor upon default, and section 9–406 then obliges the account debtor to pay the secured creditor upon proper notification of assignment of the rights to payment to the secured creditor. The account debtor, of course, needs to insure that payment made to the secured creditor will discharge its liability to the debtor. If the account debtor’s payments are insufficient to satisfy the debtor’s liability to the secured creditor, the debtor may or may not have
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Chapter 16. Basic Liability Arising From Stolen Instruments and Forged Signatures 42 results (showing 5 best matches)
- (d) If (i) a dishonored draft is presented for payment to the drawer or an indorser or (ii) any other item is presented for payment to a party obliged to pay the item, and the item is paid, the person obtaining payment and a prior transferor of the item warrant to the person making payment in good faith that the warrantor is, or was, at the time the warrantor transferred the item, a person entitled to enforce the item or authorized to obtain payment on behalf of a person entitled to enforce the item. The person making payment may recover from any warrantor for breach of warranty an amount equal to the amount paid plus expenses and loss of interest resulting from the breach.
- * * * an instrument is paid to the extent payment is made (i) by or on behalf of a party obliged to pay the instrument, and (ii) to a person entitled to enforce the instrument. To the extent of the payment, the obligation of the party obliged to pay the instrument is discharged even though payment is made with knowledge of a claim to the instrument under Section 3–306 by another person.
- A variation on this regime is made when a company decides to use an automated signature system. Agreements to use such a system invariably include a provision that authorizes the bank to pay any check that appears to be so authorized. Courts have approved this arrangement.
- of a bank who “makes or obtains payment with respect to the instrument for a person not entitled to enforce the instrument or receive payment.” If a thief deposits a stolen check in the bank and the depositary bank receives payment from the drawee, both the depositary bank who obtains the payment and the drawee who makes it commit conversion under 3–420(a).
- (2) In the case of a note, suspension of the obligation continues until dishonor of the note or until it is paid. Payment of the note results in discharge of the obligation to the extent of the payment.
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Chapter 24. The Bankruptcy Trustee vs. The Article 9 Claimant 44 results (showing 5 best matches)
- Subsection (c)(2) springs from a rule of convenience practiced under the Bankruptcy Act of 1898 that disregarded small payments as . In its original form in the 1978 Act, subsection (c)(2) protected only payments made within 45 days after the debt was incurred; in that format it appeared to be aimed at routine, small payments such as those to utilities, mortgagees, and the like. After the 45 day limit was removed in 1984 and the Supreme Court in 1991 interpreted the section to apply not merely to short-term payments, but to any ordinary course payment, the exception has assumed grand proportions. It now applies not only to consumers’ utility payments and to routine payments to trade creditors, but also to payments of tens of thousands and perhaps millions of dollars to conventional and long-term lenders such as banks. The subsection was made even more generous in 2005 when subsections (A) and (B) were made alternative; now the creditor need only satisfy one
- There are now hundreds of cases on the question what is an ordinary course payment. Note that there are a series of adjectives and phrases that limit the ordinary course transaction. The debt must have been incurred in the ordinary course of business or financial affairs of both the debtor and the transferee. In addition, the payment must have been made in the ordinary course, or according to ordinary business terms. Examples of things not in the ordinary course are easy to imagine. Payments made in direct response to creditor pressure stimulated by the deteriorating financial condition of the debtor are not ordinary course payments. On the other hand, when creditor pressure and other forms of deviance shade off into what is common or expected, even payments that are not utterly common and mundane may be regarded as ordinary course. Even late payments may be in the ordinary course where the debtor is habitually late and the industry tolerates late payments.
- 2. Debtor, a successful retailer before bankruptcy, made several payments in excess of $200,000 each to several trade creditors during the preference period. Creditor One had received $200,000 in payments periodically during the preceding year. Creditor Two had received no payments during the six-months preceding and received this payment in response to an angry confrontation between the chief executive officers. Are the payments to Creditor One or Creditor Two saved by the “ordinary course” exception?
- The first case seems easy; since there is a practice on which the creditor is relying, this seems to be an ordinary course payment. The second case is harder; the creditor might argue that it received a payment according to “ordinary business terms” but it is hard to know what that means. Surely the practice between the parties does not make this solitary payment into an ordinary course payment, quite to the contrary. So we suspect that Creditor Two will not enjoy the exception and that the payment will be found to be preferential.
- Initially, one should understand the most frequent voidable preferences. The most common is the payment of a debt within the 90 days preceding the filing of a petition in bankruptcy. Many of these payments will be saved from avoidance by the exceptions under 547(c); however, almost all of them will be subject to scrutiny and some will be voidable preferences.
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Chapter 4. Terms of the Contract (Including the Law of Tender, Excuse, and Title Transfer (2–403)) 23 results (showing 5 best matches)
- Section 2–513(3)(b) contemplates a variation on payment against documents that is considered to preserve the right to inspect. The buyer does not give up its right to inspect before payment even when it agrees to pay against documents if “such payment is due only after the goods are to become available for inspection.” The comments
- 4–7. Article 2 Gap Fillers on Payment Terms (Herein, too, of Buyer’s Tender of Payment).
- contract, seller’s delivery and buyer’s payment are not concurrent conditions. For events to be such it must be possible for them to occur at the same time. But in a shipment contract, delivery technically occurs at the point of shipment, yet payment is not due until after the goods become available for inspection at destination. Delivery and payment therefore cannot be concurrent.
- § 4–7 Article 2 Gap Fillers on Payment Terms (Herein, too, of Buyer’s Tender of Payment)
- But it must not be assumed that the buyer is entitled to withhold payment until it has taken full possession and control of the goods. Absent contrary agreement, the Code theory is that the buyer is entitled to full possession and control over the goods only where it concurrently tenders payment. Accordingly, while the seller must make the goods available for inspection, “he is not required to give up possession of the goods until he has received payment,”
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Chapter 5. Unconscionability 12 results (showing 5 best matches)
- The amount of each periodical installment payment to be made by [purchaser] to the Company under this present lease shall be inclusive of and not in addition to the amount of each installment payment to be made by [purchaser] under such prior leases, bills or accounts;
- See § 2–718. See also, Rassa v. Rollins Protective Services Co., 30 F.Supp.2d 538, 37 UCC Rep. Serv.2d 298 (D. Md. 1998) (court held that a limitation of damages is not unconscionable when a fire alarm system fails if the price charged by the system provider does not include a premium for insurance losses).
- took a slightly different approach. Finding that the buyers had already paid over $600 towards a freezer with a retail value of $300, the court “reformed and amended” the contract “by changing the payments called for therein to equal the amount of payment actually so paid.” The result is thus similar to that achieved in cases where courts have refused to enforce contracts on which payments have already been made. What are the proper limits on judicial power to reform contract terms? We believe there are some limits here, and would argue some courts have gone over the line.
- While the seller did not perform at all in American Home Improvement, Inc. v. MacIver, 105 N.H. 435, 201 A.2d 886, 2 UCC 235 (1964), it is not clear whether the buyers had made any payments.
- The remedial tools available to a modern court under section 2–302 are of a similarly equitable nature: the court may refuse to enforce the entire contract, it may refuse to enforce an unconscionable term, or it may limit the application of the terms so as to avoid an unconscionable result. Since the cases which have held contracts to be unconscionable have so far involved mostly buyers, the most common obligation the courts have refused to enforce has been the payment of the contract price.
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Chapter 2. Scope of Article 2, and Offer, Acceptance, and Consideration Thereunder 15 results (showing 5 best matches)
- A fourth criterion is manner of payment. An upfront or single payment is an indication of a sale of a good according to several courts.Payment in installments would indicate a transaction more akin to a licensing agreement or contract for services.
- (2) upon initiating the transfer, the transferee has reasonable notice of and access to the standard form before payment or, if there is no payment, before completion of the transfer;
- See ProCD, Inc. v. Zeidenberg, 86 F.3d 1447, 1450, 29 UCC2d 1109 (7th Cir. 1996) (treating “licenses as ordinary contracts accompanying the sale of products”, and affirming the district court’s decision stating that the mass market software transaction at issue was a transaction in goods because purchasers do not make periodic payments, the software company does not retain title for the purpose of a security interest, and no set expiration date for the licensed right exists); Olcott International & Co. v. Micro Data Base Systems, Inc., 793 N.E.2d 1063, 51 UCC2d 352 (Ind. App. 2003) (purchase of pre-existing standardized software modules). See also, Smart Online, Inc. v. Opensite Technologies, Inc., 2003 NCBC 5, 51 UCC2d 47, 2003 WL 21555316 (N.C. Super. Ct. 2003).
- illustrate one kind of modification or waiver that will stand up under the Code. The buyers of an airplane expected to pay for it out of earnings from its use, a fact known to the seller. The engine developed difficulties not covered by the seller’s warranty. The buyers told the seller they could not afford both to keep up on their monthly payments to the seller and make the repairs. The buyers even offered to return the plane in exchange for a release from any further obligations. Instead, the seller proposed a reduction in payments with an extension of the payment period, and the buyers agreed. Later the court refused to let the seller disaffirm this modification. Although the buyers gave no new consideration for the modification, they did not overreach. The buyers also had a good business reason for modification, and both sides may have benefitted—a Pareto outcome superior to default?
- AT&T Wireless, 2–Year Contract Automatic Phone System e-Signature FAQs, available at http://www.attwireless.com (last visited Sept. 26, 2004).
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Chapter 23. Creation and Perfection of Enforceable Article 9 Interests 34 results (showing 5 best matches)
- The second circumstance arises when a loan is re-financed or when a debtor makes payments against a loan that is secured by two security interests, one purchase money and one non-purchase money. Assume, for example, the debtor borrows $2,000 from the bank in a purchase money loan to buy a stereo system. Six months later the bank “refinances” the loan; at that time the debtor borrows an additional $1,000. Has the refinancing caused the security interest to lose its purchase money status? For consumer cases, 9–103 declines to give an answer; however, for business cases, 9–103 rules that the purchase money status is retained. So section 9–103 leaves a court free to follow its own rule (if it has one), to apply the business rule by analogy, or to reason from other cases. In these cases we believe the courts should apply the business rule by analogy.
- (g) [Lien securing right to payment.] The attachment of a security interest in a right to payment or performance secured by a security interest or other lien on personal or real property is also attachment of a security interest in the security interest, mortgage, or other lien.
- (2) an assignment of accounts or payment intangibles which does not by itself or in conjunction with other assignments to the same assignee transfer a significant part of the assignor’s outstanding accounts or payment intangibles;
- Even if it is conceded that the original security interest retains its purchase money status, the new loan ($1,000) will not be a purchase money loan and will not be automatically perfected. Now, assume the debtor pays $1,000 against its consolidated debt. Does this $1,000 reduce the loan that is secured by the purchase money security interest, does it extinguish the $1,000 loan that is secured by non-purchase money security interest, or is it allocated pro rata? This will be important if the secured creditor is depending on the automatic perfection provisions associated with purchase money loans. If the $1,000 payment is allocated on a FIFO (first in, first out) basis to the earliest loan, $1,000 of the loan is now secured by a perfected security interest (purchase money) and $1,000 is secured by an unperfected security interest. If, alternatively, the payments are allocated on a LIFO basis to the last loan, the secured creditor retains a perfected security interest as to its...
- The proposal for state-wide filing conflicted with local practices and traditional policies. It was generally thought that local creditors should be able to walk to the local courthouse and examine the files, and the local recorder of deeds should collect a fee with each filing. Nevertheless, the drafters of the 1962 Code (and the 1972 Code) proposed three alternative filing systems. These were designed to minimize the political objections of local filing officers who might lose fees from a state-wide system and also to meet the concerns of people who still wished to be able to determine a debtor’s status from local files. Even at the outset, the drafters recognized the efficiency of a state-wide filing system;
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Westlaw Appendix 3 results
- KeySearch is a research tool that helps you find cases and secondary sources in a specific area of the law. KeySearch guides you through the selection of terms from a classification system based on the West Key Number System
- complete integration with the West Key Number System so you can track legal issues discussed in a case
- U.S. Merit Systems Protection Board decisions
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Chapter 21. Letters of Credit 67 results (showing 5 best matches)
- Read 5–110 carefully. The warranties arise only after “payment,” so they do not help here. After payment Buyer (or more likely Buyer’s parent company who had no contract with Seller but who put up the letter) could sue under 5–110(a)(2).
- Having decided not to honor the demand for payment, the bank cannot “gratuitously characterize itself as a mere stakeholder * * *.” We endorse these views. The utility of the letter of credit depends upon quick payment or, at minimum, quick decision whether to pay. Banks should not be permitted to hide behind the court’s skirts in an interpleader action.
- Colonial made a settlement with Marquette’s receiver for a $500,000 cash payment and an assignment of Marquette’s interest in the reimbursement agreement and personal guarantees. In denying Colonial’s claim against Proc and its principals, the First Circuit stressed the language of the reimbursement agreement. Proc became liable under the reimbursement agreement only if Marquette was “required to make payment.” Since the bank never actually paid, Proc had no liability to Marquette which could be assigned to Colonial. Similarly, the principals’ guarantees were conditioned upon Proc’s non-payment of a liability, so they, too, had no obligation for Marquette to assign.
- To illustrate, assume a case in which a bank makes presentation of beneficiary’s invoices together with the beneficiary’s draft that has been negotiated to the bank under a negotiation credit. If the bank has given value and taken without notice, it will be a holder in due course of the draft and, under 5–109(a)(1)(iii), can argue that it has a right to payment notwithstanding fraud in the underlying transaction. This is because such a bank would qualify as a “nominated person” under 5–102(a)(11), assuming that the credit authorized other parties to negotiate its presentation. If the credit is a negotiation credit, however, the bank cannot claim that status and can be no better than an assignee of the beneficiary’s rights to payment, whatever those rights are. If, on the other hand, the credit is a negotiation credit, all would agree that the bank—meeting the tests of the holder in due course statute—would have a right to insist upon payment from the issuer notwithstanding fraud in...
- Note the explicit requirements in the letter and think for a moment how a particular document that appears to fulfill the letter might be found not to do so. Note how carefully the bank (and the drafter of the letter) attempts to limit the beneficiary’s acts even by offering examples of the documents which must be presented to earn payment. As we will see, the bank is often in the position of an independent third party who is asked to make difficult choices between its loyalty to its applicant (who does not wish it to pay) and its legal duty to the beneficiary (who asserts a legal right to payment). The bank’s discomfort will be inversely related to the care and foresight of its drafter. If the letter is clear, the bank can reject its applicant’s plea by pointing to its clear legal duty. As one reads the following section, it might be appropriate to return to the ...demand for payment to see how the language of those might guide one around some of the pitfalls that are disclosed...
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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 19 results (showing 5 best matches)
- arguments for the efficiency of a particular legal rule assume that individuals remain free to contract around that rule, and a legal system that denies private parties the right to vary rules in this way will tend to be less efficient than a system that adopts the same rules but permits contractual variation.
- Where the seller has broken a contract to deliver specific or ascertained goods, a court having the powers of a court of equity may, if it thinks fit, on the application of the buyer, by its judgment or decree direct that the contract shall be performed specifically, without giving the seller the option of retaining the goods on payment of damages. The judgment or decree may be unconditional, or upon such terms and conditions as to damages, payment of the price and otherwise, as to the court may seem just.
- in goods in his possession or control for any payments made on their price and any expenses reasonably incurred in their inspection, receipt, transportation, care and custody and may hold such goods and resell them in like manner as an aggrieved seller (Section 2–706).
- (3) Acceptance of any improper delivery or payment does not prejudice the aggrieved party’s right to demand adequate assurance of future performance.
- On “reasonable grounds” and “adequate assurance,” Comment 4 cites two pre-Code cases which together illustrate the intended commercial standards. According to Comment 4, reasonable grounds for insecurity would exist in a case like Corn Products Refining Co. v. Fasola, 94 N.J.L. 181, 109 A. 505 (1920), where a buyer who customarily took advantage of a ten-day payment discount failed to make his usual ten-day payment. As to the adequacy of assurance, the Comment states that in the absence of such a failure to pay within the customary period, that sending a good credit report from a banker and expressing an ability and willingness to pay within thirty days should be satisfactory. Comment 4 also expressly requires that the satisfaction of a party requesting “assurance” must be based on reason and not caprice. Of course, a seller must show it demanded assurances either orallly or in writing to show breach arising from failure to provide assurance. Cumberland County Improvement Authority...
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Chapter 25. Priority Conflicts 26 results (showing 5 best matches)
- Over the next several months dealer makes payments of $1 million on the reworked loan. He then files bankruptcy and Bank argues that the $1 million should be treated as a payment on the purchase money part of the loan, to which its loan is inferior, and not on the non-purchase money loan to which it is superior. Bank will probably lose. Subsection (e) allows Finance Company and debtor to agree to any allocation method that is reasonable. One would expect them to agree that payments should go first to the inferior loan and second to the purchase money loan.
- ...interests in accounts receivable and other intangibles will not enjoy purchase money status. In the business context, subsection 9–103(f) makes it clear that a single security agreement can give rise to a purchase money security interest and also to a non-purchase money security interest. Subsection (b) even elevates certain inventory purchases to purchase money status despite the fact they do not themselves secure a “purchase money obligation.” To understand how these sections might work, consider a hypothetical case. Assume that debtor, a John Deere farm implement dealer, buys ten tractors in a sequence of individual transactions each of which is financed by the bank and each of which includes a cross-collateral clause (a clause that makes every individual item collateral, not only for its own purchase price, but also for the purchase price of the other nine tractors). Assume that debtor sells the tenth tractor and remits the proceeds to the bank whose FIFO accounting system...
- 19 states have central filing systems certified by the U.S. Department of Agriculture: AL, CO, ID, LA, ME, MN, MS, MT, NE, NH, NM, ND, OK, OR, SD, UT, VT, WV, and WY. See, Erickson, The Federal Farm Products Statute: What do Buyers and Agricultural Lenders Think After Eight Years of Living With It, 18 Hamline L. Rev. 363, 380 n.39 (1995) (citing 20 states with certified central filing systems, however, certification of Arkansas’ filing system was withdrawn in 1989); U.S. Department of Agriculture.
- (a)(47) a negotiable instrument or any other writing that evidences a right to the payment of a monetary obligation, is not itself a security agreement or lease, and is of a type that in ordinary course of business is transferred by delivery with any necessary indorsement or assignment. The term does not include (i) investment property, (ii) letters of credit, or (iii) writings that evidence a right to payment arising out of the use of a credit or charge card or information contained on or for use with the card[.]
- Determining priority by order of filing protects the filing system—that is, allowing the first secured party who has filed to make subsequent advances without each time having to check for subsequent filings as a condition of protection. Both as to future advances and to after-acquired collateral, a lender’s priority generally dates back to the time of filing.
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Chapter 15. The Holder in Due Course 59 results (showing 5 best matches)
- the need to refer to another document for payment instructions did not prevent the instrument from being negotiable. Regent contracted with Azmat, a textile company located in Bangladesh, for the purchase of bed sheets and pillowcases for import. An essential condition of the sale was that the goods be manufactured in Bangladesh since such goods were not subject to quota restrictions. Azmat required payment by “confirmed irrevocable letter of credit” before shipping the textiles. Regent sent the letters of credit, and each draft indicated that payment was to be made “at 90 days deferred from bill of lading date.” Azmat’s advising bank, International Bank, presented these drafts along with the bill of lading to Regent’s bank for payment. After Regent’s bank had made partial payments, United States Customs detained the textiles for inspection and soon afterward determined that they had actually been manufactured in Pakistan. Regent sought to enjoin his bank from further payments and...
- To be negotiable, an instrument must require payment of “a fixed amount of money, with or without interest or other charges.” This language, added during the 1990 revisions, embraces variable rate notes. Before the revisions, the Code required payment of a “sum certain,” and that language produced some uncertainty.
- In the usual case a depositary bank will not have become a holder in due course until an item deposited for collection is drawn upon, otherwise “applied or at final payment by the payor.” Different rules apply when the item is not deposited for collection but is taken in payment for an antecedent indebtedness or when the credit is payment for a discounted note. The latter case is presumably covered by 4–210(a)(3) in that the depositor has a legal “right” to withdraw such a credit.
- a check cashing company sued drawer for payment after drawer contacted his bank and ordered the bank to stop payment. Drawer of check had negotiated with a contractor for services to be completed over the next three days and drawer drafted a post-dated check as payment. (The check bore the date of the projected date of completion of the services.) Contractor immediately cashed check with plaintiff, who submitted the check for payment. The drawer, fearing services would not be completed, contacted his bank the same day and ordered it to stop payment. The court held that the future date on the check should have put the check cashing company on notice that the check might not be good. The court also held that the company failed to act in a commercially reasonable manner and did not take the check in “good faith” when it did not attempt to verify the check. We are less certain than the court is about the commercial practice with respect to postdated checks. In some circumstances it...
- The next morning, Parmet was back in Dallas waiting at the door when Guaranty opened. Claiming that the $1,900,000 check he deposited had been drawn on insufficient funds, he told the bank he wanted to stop payment on the “official check” drawn the day before. Guaranty immediately contacted Citibank and instructed it to stop payment on the check. Shortly thereafter, Horseshoe called Citibank to inquire about the check. Citibank informed Binion that Guaranty had stopped payment. The lawsuit followed.
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Chapter 9. Buyer’s Rejection or Revocation of Acceptance, and Seller’s Right to Cure 21 results (showing 5 best matches)
- For cases where payment was held to constitute a § 2–606(1)(a) acceptance, see Atlantic Aluminum & Metal Distrib. v. Adams, 123 Ga.App. 387, 181 S.E.2d 101, 9 UCC 63 (1971) (payment for aluminum with knowledge of defects); Konitz v. Claver, 287 Mont. 301, 954 P.2d 1138, 36 UCC2d 688 (1998) (noting that buyer’s payment, “although not determinative, signifies his acceptance of the goods”).
- First, non-payment for a delivered shipment may make it impossible or unreasonably burdensome from a financial point of view for the seller to supply future installments as promised. Second, buyer’s breach of his promise to pay for one installment may create such a reasonable apprehension in the seller’s mind concerning payment for future installments that the seller should not be required to take the risk involved in continuing deliveries.
- The buyer argues that the seller in an installment contract may never terminate a contract, despite repeated default in payment by the buyer, without first invoking the insecurity methodology of * * * 2–609. That is not the law. If there is reasonable doubt about whether the buyer’s default is substantial, the seller may be well advised to temporize by suspending further performance until it can ascertain whether the buyer is able to offer adequate assurance of further payments. * * * But if the buyer’s conduct is sufficiently egregious, such conduct will, in and of itself, constitute substantial impairment of the value of the whole contract and a present breach of the contract as a whole. An aggrieved seller is expressly permitted * * * [under 2–703(f)] upon breach of a contract as a whole, to cancel the remainder of the contract “with respect to the whole undelivered balance.”
- offers a uniquely appropriate example for a payment by the buyer to the seller, or perhaps to a third party. In property. The buyer had no difficulty with the truck; according to the court it operated quite satisfactorily. In that case, the seller—or perhaps the true owner—should be entitled to payment for the buyer’s use. Moreover, the value of the use in that case could easily be estimated by a reference to the rental value of similar trucks. We believe that the seller—or the true owner if not the seller—should enjoy that amount as an offset or as a recovery from the buyer.
- Of course, where goods are purchased for resale, the intermediate buyer cannot rightfully reject merely because the ultimate buyer fails to complete the transaction. See Electrical Power Systems, Inc. v. Argo International Corp., 864 F.Supp. 1080, 27 UCC2d 94 (N.D. Okla. 1994).
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Title Page Part 2 25 results (showing 5 best matches)
- 4–7 Article 2 Gap Fillers on Payment Terms (Herein, too, of Buyer’s Tender of Payment)
- 20–22 Erroneous Execution Through Funds Transfer System or Other Communication System
- Chapter 18. NSF Checks, Documentary Drafts, and Forged Checks: Liability of Payors and of Collecting Banks, Final Payment, Delay
- 18–2 Legal Consequences of Final Payment of the Check
- 18–4 Final Payment Defined
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Chapter 22. Scope of Article 9 40 results (showing 5 best matches)
- The coverage of “sales” of accounts and other intangibles were enlarged by the 1999 revision. The “factoring” or “sale” of rights to payments by the person entitled to those payments to a third person has long been regarded as a financing transaction. As such, they have most of the economic characteristics of a personal property financing transaction and are now covered more fully by Article 9 than was true prior to 1999.
- The real challenge in drawing a distinction between realty and personalty interests arises when a mortgagee, a seller of land, or a lessor, grants a security interest to a third party in a stream of payments that come from the mortgage note, from the land-sale contract buyer, or from the lessee. Underlying these transactions is a real estate transaction, but our secured creditor has a security interest not in the real estate, but in the stream of payments.
- (g) [Lien securing right to payment.] The attachment of a security interest in a right to payment or performance secured by a security interest or other lien on personal or real property is also attachment of a security interest in the security interest, mortgage, or other lien.
- Section 9–109 narrows the exclusions as compared to prior law in several ways. First, it brings within Article 9 some assignments of “health care insurance receivables * * *.” This section recognizes that rights to payments asserted against the health care insurers are more like conventional receivables than they are like one shot payments from the conventional liability insurers.
- Because there is automatic perfection both for buyers of notes and payment intangibles, it will not be necessary to determine whether the transfers of loan participations are purchases of payment intangibles or transfers of interests in negotiable notes.
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Chapter 17. Reallocation of Loss Because of Fault 34 results (showing 5 best matches)
- If an unaccepted draft is presented to the drawee for payment or acceptance and the drawee pays or accepts the draft, (i) the person obtaining payment or acceptance, at the time of presentment, and (ii) a previous transferor of the draft, at the time of transfer, warrant to the drawee that pays or accepts the draft in good faith that:
- In its second sentence (“The statement of account provides sufficient information if the item is described by item number, amount, and date of payment.”), section 4–406(a) facilitates the truncation of checks. It is now common in credit unions for the depositor to receive merely a listing of monthly checks without identification of the payee by name and with identification of individual checks only by item number, amount, and date of payment. If the depositor has maintained a decent ledger of checks drawn during the month, this limited information will be enough to identify most unauthorized payments. Presumably the banks favored the inclusion of the quoted statement from 4–406(a) to insure that a court would not find them to have violated some unstated obligation by failing to return checks to the depositor, or by not giving a more detailed statement of account.
- Thief also stole five blank checks of Manufacturer. Thief uses Manufacturer’s facsimile signature machine, which is sitting on a desk next to the check file, to sign each of them and those clear two weeks later in a sum of $1,000,000. Manufacturer sues payor bank for improper payment.
- (b) If (i) an instrument is taken from a fiduciary for payment or collection or for value, (ii) the taker has knowledge of the fiduciary status of the fiduciary, and (iii) the represented person makes a claim to the instrument or its proceeds on the basis that the transaction of the fiduciary is a breach of fiduciary duty, the following rules apply:
- In the case of an instrument payable to the represented person or the fiduciary as such, the taker has notice of the breach of fiduciary duty if the instrument is (i) taken in payment of or as security for a debt known by the taker to be the personal debt of the fiduciary, (ii) taken in a transaction known by the taker to be for the personal benefit of the fiduciary, or (iii) deposited to an account other than an account of the fiduciary, as such, or an account of the represented person.
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Chapter 3. Statute of Frauds and Parol Evidence Rule 28 results (showing 5 best matches)
- Some courts have had to consider whether a down payment on a single nondivisible unit transaction indicates a contract and permits the party making the payment to prove and recover in full on his oral contract. A court might say that 2–201(3)(c) is not satisfied, because payment must be made in full with respect to the single unit. Williamson v. Martz, is illustrative. There the court held that a $100 down payment on an $11,000 Rolls Royce brought 2–201(3)(c) into play and permitted the seller to try to prove his oral contract for the whole.
- Occasionally, a buyer makes a down payment on an oral contract within the statute, but repudiates and sues to get the down payment back. Assume the seller does not want to invoke 2–201(3)(c), but does want to keep the down payment. Can seller do this? A few courts, in pre-Code cases, seem to have said yes, but these results are inconsistent not only with the letter of contract theory, but also with the spirit of restitutionary theory. The seller has been enriched. The seller should not be allowed to retain this benefit; for it has no enforceable contract claim to the money. Moreover, the buyer is not a volunteer conferring a benefit gratuitously, rather the down payment was paid in contemplation of the performance of a contract unenforceable under the statute of frauds.
- Alarm Device Mfg. Co. v. Arnold Indus., Inc., 65 Ohio App.2d 256, 417 N.E.2d 1284, 31 UCC 821 (1979) (when buyer of steel screws accepted entire 10,000 lot shipment, the entire transaction fell within the 2–201(3)(c) exception); TCP Indus., Inc. v. Uniroyal, Inc., 661 F.2d 542, 32 UCC 369 (6th Cir.1981) (where whole shipment of apportionable butadiene is paid for and accepted, the oral contract was enforceable on the whole shipment); Bowlin’s, Inc. v. Ramsey Oil Co., 99 N.M. 660, 662 P.2d 661, 36 UCC 1110 (App.1983) (when written contract for sale of gasoline terminated, and consignee orally made the same contract, payment and acceptance of gasoline fell within 2–201(3)(c) exception); Battista v. Radesi, 112 A.D.2d 42, 491 N.Y.S.2d 81, 41 UCC 748 (1985) (when 1,000 cases of wine paid for with $500 deposit, deposit was a partial payment for entire shipment); Seminole Peanut Co. v. Goodson, 176 Ga.App. 42, 335 S.E.2d 157, 42 UCC 74 (1985) (whole peanut crop accepted and thus whole...
- Presti v. Wilson, 348 F.Supp. 543, 11 UCC 716 (E.D.N.Y.1972). See also, Integrity Material Handling Sys. v. Deluxe Corp., 317 N.J.Super. 406, 722 A.2d 552, 40 UCC2d 377 (1999) (plaintiff’s tendering of down payment to contractor did not constitute acceptance of payment by the contractor because contractor did not subsequently cash the check).
- See, e.g., Kaufman v. Solomon, 524 F.2d 501, 17 UCC 1159 (3d Cir.1975); Songbird Jet Ltd. v. Amax, Inc., 581 F.Supp. 912, 38 UCC 431 (S.D.N.Y.1984) (check for $250,000 indorsed and proceeds kept by defendant for two months and then returned to plaintiff would be, if proven, an acceptance); Miller v. Wooters, 131 Ill.App.3d 682, 86 Ill.Dec. 835, 476 N.E.2d 11, 40 UCC 1623 (1985) (delivery of check to seller constitutes payment under 2–201(3)(c) and buyer’s subsequent stop payment order of no legal significance). But mere receipt and holding of check for a brief period may not be sufficient. See also In re Uni–Products, Inc., 153 B.R. 764, 20 UCC2d 1233 (Bankr.E.D.Mich.1993) (acceptance of promissory note constitutes payment under 2–201(3)(c)).
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Chapter 8. Seller’s Remedies 32 results (showing 5 best matches)
- Section 2–709(2) leaves a few matters to conjecture. The section requires a seller suing for the price to “hold for the buyer any goods which have been identified to the contract and are still in his control * * *.” That the breaching buyer is entitled to the goods upon payment of a 2–709 judgment, is left to implication. Several courts have ruled that the buyer is entitled to unsold goods upon payment to the seller. Without inquiring as to the mechanics of such an exchange, this result still leaves many questions. What of the breaching buyer who pays part of the judgment for the price? We can imagine cases where the buyer might then be entitled to part of the goods, but this solution breaks down when there is partial payment for indivisible goods. Presumably in the case of indivisible goods partially paid for, such as a Boeing 747, for example, one could grant the buyer a security interest in the goods to the extent of the buyer’s payment but subordinate that interest to the seller...
- It is evident that some alternative contracts giving the power of choice between the alternatives to the promisor can easily be confused with contracts that provide for the payment of liquidated damages in case of breach, provided that one of the alternatives is the payment of a sum of money. * * * If, upon a proper interpretation of the contract, it is found that the parties have agreed that either one of the two alternative performances is to be given by the promisor and received by the promisee as the agreed exchange and equivalent for the return performance rendered by the promisee, the contract is a true alternative contract. This is true even though one of the alternative performances is the payment of a liquidated sum of money, that fact does not make the contract one for the rendering of a single performance with a provision for liquidated damages in case of breach.
- If, for example, the original contract called for payment of $20,000 (including interest) in semi-annual installments over three years but the resale contract required total payment of $12,000 in cash, the court could not simply subtract the price received in the second case from the total time price in the first case and get a fair result. The court must adjust for the credit factor in the original contract. The present value of $20,000 to be paid in six semi-annual payments over three years would be much less than $20,000. The cash resale price should be subtracted from the present value of the $20,000 in order to get the correct damage figure. No case to date has encountered such a problem and nothing indicates that these problems will be grave. They should be less grave than analogous problems respecting “cover” under 2–712.
- In one case, an able judge indicated that a payment (which could have been as large as $20,000,000) might constitute incidental damages. In Union Carbide Corp. v. Consumers Power Co., Union Carbide made payments to its seller to be freed from the obligation to purchase oil that its buyer, Consumers Power, refused to take. Quaere whether the drafters intended payments of that type and magnitude to be regarded as merely “incidental” to the main contract action? Since the seller in that case presumably could have recovered the same amount under 2–708(2) no damage was done. The case, however, is but another that poses the
- L & M Enterprises, Inc. v. BEI Sensors & Systems Co., 45 F.Supp.2d 879, 38 UCC2d 1181 (D. Kan. 1999) (cancellation, unlike termination, does not require reasonable notice); Ergonomic Systems Philippines Inc. v. CCS Intern. Ltd., 7 A.D.3d 412, 777 N.Y.S.2d 446, 53 UCC2d 789 (1st Dept. 2004) (a seller who is first to commit material breach, cannot withhold delivery). The Article 2 Revision Study Group wanted to clarify that the seller may cancel for the buyer’s failure to pay on time, Study Committee Report at 202.
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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) 12 results (showing 5 best matches)
- Also obvious is the fact that the more remote the payment, the greater the impact of the discount rate. Thus the difference between a 2% and a 10% discount over only two years is $135 on $1,000 ($961 = $826) but that difference grows to $434 for a payment due ten years from the time of calculation. Assume a case in which a defendant owes the plaintiff $1,000,000 for each of seven years. The present value of those damages at a 6% discount is $5,582,000; their present value at a 10% discount rate is almost $1,000,000 less, $4,868,000. As the dollar amounts grow and the prospective time of payment becomes more remote, discount rates have a growing importance, merit careful examination and can engender bitter argument.
- (2) The decree for specific performance may include such terms and conditions as to payment of the price, damages, or other relief as the court may deem just.
- i.Lan Systems, Inc. v. Netscout Service Level Corp. deals with the claim that a software system is unique, so as to entitle the buyer/licensee to an order that the licensor continue to update and service for some indefinite period. The licensee argued that the software was unique for two reasons: 1) it was copyrighted and took years to produce; and 2) the licensee had “tailored” its business to fit the software. The court rejected the claim. It noted that many things which are not unique are copyrighted and took great cost and effort to produce. The court concluded that several competing software packages could and did perform the same functions as the software in the case. It suggested that the licensee was confusing reliance with uniqueness. So, at least in Massachusetts, not much software is unique, and surely the court is right to focus on function, not on a program’s elegance or unusual technical features.
- the seller of plumbing and heating materials made an installment contract with the buyer. Several months later the buyer was $38,000 behind in payments for installments of goods delivered. After the seller demanded assurance of performance from the buyer, the buyer promised that he would pay the outstanding indebtedness if the seller would continue his performance. When a month passed and the buyer had made no further payments, the seller informed the buyer that further deliveries would not be made unless the buyer deposited in escrow a sufficient amount of cash to pay for the delivered goods. The buyer did not escrow. The court held that the seller had “reasonable grounds for insecurity” and that his suspension of performance was justified under 2–609.
- the court denied the corporate buyer recovery for losses its employee-doctor suffered when he had to spend time away from his private practice to work on a computer system that failed to function as warranted. The evidence showed only a loss to the doctor’s private practice, not a loss to the buyer.
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Chapter 4. Terms of the Contract (Including the Law of Tender, Excuse, and Title Transfer (2–403)) Part 2 25 results (showing 5 best matches)
- Speedi Lubrication Centers, Inc. v. Atlas Match Corp., 595 S.W.2d 912, 29 UCC 556 (Tex.Civ.App.1980) (where parties had agreed any repudiation by buyer would entitle seller to full payment in advance of delivering remaining goods, seller’s failure to deliver goods did not bar it from recovering after buyer defaulted); St. Paul Structural Steel Co. v. ABI Contracting, Inc., 364 N.W.2d 83, 40 UCC 789 (N.D.1985) (trial court erred in applying § 2–310 to determine when payment due since only gap in agreement was regarding retainage fee; parties had agreed on when progress payments due). Of course, the parties can intend to contract even though no payment terms are specified. See, Crest Ridge Construction Group, Inc. v. Newcourt, Inc., 78 F.3d 146, 29 UCC2d 130 (5th Cir. 1996). Absent agreement on credit terms, seller is entitled to retain possession until buyer pays cash. See State of Oregon v. Alexander, 186 Or.App. 600, 64 P.3d 1148, 49 UCC2d 1134 (2003).
- §§ 2–301; 2–507. The breach may or may not be a total breach, as in an installment case. See, e.g., § 2–612(3). See also, Ross Cattle Co. v. Lewis, 415 So.2d 1029, 34 UCC 913 (Miss.1982) (seller in breach when failed to make proper tender of delivery and had cattle sold at auction instead of delivering to buyer; buyer not in breach for failing to tender payment prior to delivery as requested by seller where contract made payment due on delivery; seller entitled to demand assurance under § 2–609 when insecure but seller not entitled to treat contract as breached when buyer fails to tender payment earlier upon seller’s request).
- Tallackson Potato Co. v. MTK Potato Co., 278 N.W.2d 417, 26 UCC 929 (N.D.1979) (where payment schedule was designed after third party’s payment schedule to buyer, but not explicitly made an assumption of the contract, buyer was still liable on payment schedule to seller, even though third party failed to pay buyer); Federal Pants, Inc. v. Stocking, 762 F.2d 561, 41 UCC 110 (7th Cir.1985) (seller did not breach by nondelivery where manufacturer of goods had terminated seller as an authorized dealer); Red River Commodities, Inc. v. Eidsness, 459 N.W.2d 805, 13 UCC2d 1076 (N.D.1990) (excuse clause including “acts of God” implies non-occurrence of drought was basic assumption).
- See, e.g., Brownie’s Army & Navy Store, Inc. v. E.J. Burke, Jr., Inc., 72 A.D.2d 171, 424 N.Y.S.2d 800, 28 UCC 90 (1980) (plaintiff not entitled to payment of interest on delinquent account or payment of attorneys fees for collection of account despite printed terms on sales slip after plaintiff had accepted late payment from defendant for 15 years; and plaintiff did not mention interest or placement of account with attorney for collection until 2 months before bringing suit.); Figgie International, Inc. v. Destileria Serralles, Inc., 190 F.3d 252, 39 UCC2d 275 (4th Cir. 1999) (usage of trade precluded consequential damages); Pioneer/Eclipse Corp. v. Kohler Co., Inc., 113 F.Supp.2d 811, 44 UCC2d 59 (W.D.N.C. 2000) (course of dealing confirmed warranty term); Interstate Narrow Fabrics, Inc. v. Century USA, Inc., 218 F.R.D. 455, 52 UCC2d 381 (M.D.N.C. 2003) (course of performance may show express terms were modified).
- §§ 2–310(a); 2–507(1); 2–507, Comment 2. See also Koreag, Controle et Revision S.A. v. Refco F/X Associates, Inc. (In re Koreag, Controle et Revision S.A.), 961 F.2d 341, 17 UCC2d 1036 (2d Cir.1992) (unless otherwise agreed, payment due on delivery); State of Oregon v. Alexander, 186 Or.App. 600, 64 P.3d 1148, 49 UCC2d 1134 (2003) (payment due on delivery).
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Chapter 12. Defenses to Warranty Actions 9 results (showing 5 best matches)
- the allegedly defective product was a heating system. The seller had warranted the system would be able to maintain the temperature at 75 degrees inside at a −20 degree outside temperature. The time of tender was July, 1961. The court decided that the statute did not begin to run as of that date because the warranty explicitly extended to future performance of the goods. The court stated:
- Here the warranty in question relates to what the heating system sold and delivered in June and July 1961, would do in the future, i.e., when it was tested under subzero temperature conditions.
- the Texas Supreme Court imported comparative fault into warranty actions using “proximate cause” as the vessel. It relied on 2–715 and Comment 5 to 2–715 to produce what is essentially a comparative fault system. Under
- 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.
- W. Prosser & W. Page Keeton, Handbook of the Law of Torts, § 101, at 707–10 (5th Ed.1984). See, e.g., Dixie McFadden et al. v. Dryvit Systems, Inc., 2004 WL 2278542, 54 UCC2d 934 (D.Or.2004) (purchasers who fell within manufacturer’s normal distribution chain could seek property damages from manufacturer based on implied warranty even though they were not in privity).
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Chapter 10. Warranty Part 2 4 results
- Osterholt v. St. Charles Drilling Co., 500 F.Supp. 529, 30 UCC 807 (E.D.Mo.1980) (contract to install a well and water system on plaintiff’s property was not governed by the Code)
- 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).
- No damage, no recovery. See Martin–Kahill Ford Lincoln Mercury, Inc. v. Skidmore, 62 N.C.App. 736, 303 S.E.2d 392, 36 UCC 779 (1983) (buyer failed to prove payment of tax liens).
- Camara v. Hill, 157 Vt. 156, 596 A.2d 349, 15 UCC2d 1216 (1991) (seller of computer system found to have breached 2–312 in regard to two software programs which were not original copies as agreed upon); Microsoft Corp. v. Logical Choice Computers, Inc., 42 UCC2d 727 (D. Ill. 2000) (recognizing the viability of a 2–312 claim where defendant, accused of distributing infringing software, files third-party complaints against supplier of the software, but court ultimately dismissing the third-party complaints for lack of proper notice of breach under 2–607).
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Index Part 2 8 results (showing 5 best matches)
Chapter 10. Warranty 9 results (showing 5 best matches)
- In our judgment it would be reasonable for a court to find that the “deal” had not been concluded despite the payment of money at least until the buyer had passed the seller’s threshold. Until that time (or until some other necessarily arbitrary limit) the buyer, as a matter of empirical fact, will have the power to get the seller to take the goods back and undo the sale. To say that statements made after the payment of the cash but before the expiration of this short period are express warranties recognizes the practical realities even though it does some
- Had SWEPCO * * * informed the Board of Education that the Topcoat System would be ineffective to patch the roof and in fact would increase substantially the number and volume of leaks and thus cause significant damage to the building and its contents, [they] undoubtedly would not have entered into the contract.
- the seller at auction of a used carwash system had only leased the system from the manufacturer and so did not have title to sell; hence manufacturer won in suit to recover system from buyer also in part because the auctioneer expressly and repeatedly disclaimed all warranties.
- a court held that there was no ordinary purpose for an aluminum casting “system” designed and manufactured at buyer’s request for use in its electrical appliance factory. Since both parties were sophisticated business entities with equal skill and knowledge concerning the transaction, no warranty of merchantability arose.
- a contract for the purchase and installation of a well and water “system” of indefinite description but with a certain warranted capacity was not covered by the Code. The contract was held to be essentially for services since there was no hint of specific items to be installed and the goods did not become identified to the contract until they were actually installed.
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Chapter 21. Letters of Credit Part 2 5 results
- For such reasons, letters of credit may not always be more attractive to the applicant than standard bonds or guarantees, particularly in situations where the debtor-applicant may want to be able to fight it out in court with the creditor-beneficiary before payment is made.
- This rule makes perfect sense, as standby letters of credit are expressly designed to insure payment when the applicant cannot pay, which must certainly include situations where the applicant files for bankruptcy and the automatic stay prohibits access to the debtor’s assets. A contrary rule would remove the entire value of standby letters in such circumstances.
- Integrated Measurement Systems, Inc. v. International Commercial Bank, 757 F.Supp. 938, 14 UCC2d 1167 (N.D.Ill.1991) (bank bound by both UCP 8 and pre-revision UCC 5–107 when provisions are not conflicting).
- http://www.uncitral.org/uncitral/en/uncitral_texts/payments/1995Convention_guarantees_credit.html
- See also Integrated Measurement Systems Inc. v. International Commercial Bank, 757 F.Supp. 938, 14 UCC2d 1167 (N.D.Ill.1991) (description in the airbill was consistent with the invoice; held: complying); Exotic Traders Far East Buying Office v. Exotic Trading U.S.A., Inc., 717 F.Supp. 14, 9 UCC2d 698 (D.Mass.1989) (court disregarded discrepancies in shipping documents misstating date of telex and “F.O.B. Korea” rather than “F.O.B. Seoul” as hypertechnical and not misleading); Continental Casualty Co. v. Southtrust Bank, N.A. 933 So.2d 337, 58 UCC2d 372 (Ala.2006) (sight draft identifying beneficiary by name but omitting address was held complying).
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Chapter 6. Risk of Loss 15 results (showing 5 best matches)
- illustrate the problem. There the seller had reached agreement with buyer for the sale of a colt. The parties had agreed that the seller would hold the colt for the buyer and, depending upon the terms of the payment of the price, would or would not charge him a fee for stabling the colt. The colt was killed without any fault of the seller, and the seller sued the buyer for the purchase price. In that case the seller could certainly argue that he was a bailee and that risk had passed since he had acknowledged the buyer’s “right” to possession of goods under (2)(b). The case would be a particularly appealing one for that argument if the seller were receiving payment from the buyer for the boarding of the horse.
- Under 2–321, one court has held that risk passage is not affected even if CIF contract provides for payment after delivery. Alaska Russian Salmon Caviar Co. v. M/V Marit Maersk, 45 Fed.R.Serv.3d 754, 41 UCC2d 158 (S.D.N.Y. 2000).
- See, e.g., Windows, Inc. v. Jordan Panel Systems Corp., 177 F.3d 114, 38 UCC2d 267 (2d Cir. 1999) (finding a shipment contract existed despite language in the confirmation stating “All windows to be shipped properly … and delivered to New York City.”).
- O.C.T. Equipment, Inc. v. Shepherd Machinery Co. and Caterpillar Redistribution Systems, Inc., 95 P.3d 197, 54 UCC2d 327 (Okla.Civ.App. 2004) (no acknowledgment of right to possession).
- See, e.g., Williams v. Lilley, 67 Conn. 50, 34 A. 765 (1895) (lessee, on subsequently exercising option of purchase, entitled to have balance of insurance money in lessor’s hands credited as payment on price).
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Chapter 11. Damages for Breach of Warranty 14 results (showing 5 best matches)
- Replacement cost may be the proper measure, as with a unique customized computer system even though such cost exceeds the contract price.
- case, the defendant had supplied the wrong kind of oil for the plaintiff’s hydraulic sawmill system. As a result, the mill did not work properly for two and one-half years. The court held it was permissible to compute lost profits for that period on the basis of past profits, since the plaintiff had an established business. correction of the problem. The plaintiff had argued that he was entitled to those damages because the burden caused by the malfunctioning hydraulic system had so hurt plaintiff’s capital situation that plaintiff could not operate at full capacity. In rejecting that argument, the court said that if there was a market available for the plaintiff’s full-capacity production, plaintiff could have obtained the necessary financing to see the company through the period.
- successfully reduced the plaintiff’s damages because of the plaintiff’s failure to mitigate. In that case the buyer of a product for resale breached the contract by reselling the defective product. When the resale contract was cancelled, the buyer who canceled offered payment for the value of the work done, but the plaintiff refused it. The court reduced the plaintiff-buyer’s award against the original seller by the amount of the payment plaintiff-buyer had refused from their buyer.
- See, e.g., A. Conard, J. Morgan, R. Pratt, Jr., C. Voltz, and R. Bombaugh, Automobile Accident Costs and Payments (1964).
- Bishop Logging Co. v. John Deere Indus. Equipment Co., 317 S.C. 520, 455 S.E.2d 183, 28 UCC2d 190 (1995). A party may also waive rights to consequential or incidental damages. See, e.g., Piper Jaffray & Co. v. SunGard Systems Int. Inc., 2004 WL 2222322, 54 UCC2d 1088 (D. Minn. 2004).
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Preface—Third Edition 1 result
- 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.”
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Preface—First Edition 1 result
- 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.
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Chapter 13. Disclaimers of Warranty Liability and Modification of Buyer’s Remedies 7 results (showing 5 best matches)
- See, e.g., Harris v. Ford Motor Co., 845 F.Supp. 1511, 25 UCC2d 53 (M.D.Ala. 1994) (allowing limitation in scope of express warranty); Hayes v. Bering Sea Reindeer Products, 983 P.2d 1280, 39 UCC2d 372 (Alaska 1999) (non-generalized, conspicuous and clear disclaimer of express warranty valid); Tulger Contracting Corp. v. Star Building Systems, Inc., 2002 WL 986994, 52 UCC2d 917 (S.D.N.Y. 2002) (disclaimer barring all warranties was enforceable where conspicuous and where buyer was already familiar from prior jobs).
- See, e.g., Dennin v. General Motors Corp., 78 Misc.2d 451, 357 N.Y.S.2d 668, 15 UCC 102 (1974) (automobile). Cf. Gable v. Silver, 258 So.2d 11, 10 UCC 316 (Fla.App.1972), aff’d, 264 So.2d 418 (1972) (common law implied warranties attaching to air conditioning system survived express warranty). Where the express warranty is still in force, buyers have been allowed to sue simultaneously upon ineffectively disclaimed implied warranties. See, e.g., Stream v. Sportscar Salon, Ltd., 91 Misc.2d 99, 397 N.Y.S.2d 677, 22 UCC 631 (City Civ.Ct. 1977).
- Russo v. Hilltop Lincoln–Mercury, Inc., 479 S.W.2d 211, 10 UCC 768 (Mo.App.1972) (court allowed recovery of purchase price of car rendered irreparable by fire despite exclusive remedy of repair or replacement); Giarratano v. Midas Muffler, 166 Misc.2d 390, 630 N.Y.S.2d 656, 27 UCC2d 87 (1995) (remedy clause for new parts failed of essential purpose because conditioned on allowing seller to inspect entire system and make any repairs deemed necessary, at buyer’s expense).
- 60 Misc.2d at 139–40, 302 N.Y.S.2d at 392–93, 6 UCC at 604–05. The original purchase price for the car was $1395, and the total price, which included tax and credit charges, was $1766.23. The plaintiff-finance company sued for the unpaid balance of $796.60 plus attorney’s fees of $119.49. The dealer received a total of $1169.75 (including the down payment by the buyers and the amounts received from the assignee and resale purchaser), and the assignee received $749.88 (including amounts received from the buyers and from the dealer on resale) to cover the $650 it paid the dealer for the contract.
- the court excused the buyers from making further payments for a used car that was constantly in need of major repairs. The sales contract included a thirty-day warranty and an apparently flawless disclaimer which the Spanish-speaking couple could not fully understand since it was printed in English.
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- the Tenth Circuit held that a secured party’s course of performance in accepting late payments might be used to interpret the meaning of the parties’ contract. Despite its conclusion that “course of performance” is not an element of the meaning of agreement in Article 1, the court reached to find a connection between Article 2 and Article 9 so to introduce course of performance into the security agreement.
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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.