Negotiable Instruments, Payments and Credits

by Warren, William D.; Walt, Steven D.

Edition: 6th

ISBN13: 9781587787409

ISBN10: 1587787407

Format: Hardcover

Pub. Date: 2004-06-03

Publisher(s): West Academic

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Summary

This law school casebook updates the previous edition with materials on Revised Articles 3 (Negotiable Instruments), 4 (Bank Deposits and Collections), 5 (Letters of Credit) and 8 (Investment Securities), as well as new Article 4A (Funds Transfers). New Problems and Notes are integrated with cases to allow convenient treatment of statutory innovations. Relevant federal law is considered throughout.

Preface

iii

Acknowledgments

Table of Cases

xix

Table of Statutes

xxiii

Negotiability and Holders in Due Course

(80)

Introduction

(1)

Concept of Negotiability

(12)

Historical Origin

(3)

Merger Doctrine

(1)

Negotiation and Transfer

(1)

Negotiation

(1)

Transfer

(1)

Problems

(1)

Discharge

(1)

Problem

(2)

Problem

(1)

Holder in Due Course: Freedom From Claims and Defenses

(1)

Problem

(1)

Claims of Ownership

(1)

Problem

(1)

Ordinary Defenses

(1)

Real Defenses

(1)

Claims in Recoupment

(1)

Problem

(1)

Formal Requisites of Negotiable Instruments

(9)

Taylor v. Roeder

(5)

Notes

(2)

Requirements for Holder in Due Course

(58)

Good Faith and Notice

(2)

Kaw Valley State Bank & Trust Co. v. Riddle

(7)

Note

(1)

Problems

(1)

Maine Family Federal Credit Union v. Sun Life Assurance Co.

(9)

Notes

(1)

Overdue or Irregular Instruments

(1)

Problem

(2)

Problems

(1)

Negotiability in Consumer Transactions

(1)

Introduction

(1)

Universal C.I.T. Credit Corp. v. Ingel

(3)

Note

(2)

The Legislative Response

(1)

Consumer Credit Sales

(2)

Purchase Money Loans

(1)

New Subsection 3--305(e)

(1)

Gonzalez v. Old Kent Mortgage Company

(4)

Note

(1)

Payee as Holder in Due Course

(1)

Transactions With Fiduciaries

(1)

Problem

(1)

Smith v. Olympic Bank

(3)

Note

(1)

Problem

(1)

Note: Uniform Fiduciaries Act

(1)

Problem

(1)

Value

(1)

Introduction

(1)

Problems

(1)

Rights of Depositary Bank in Deposited Check

(1)

Problem

(1)

Note

(2)

Article 9 Security Interest as Value

(1)

Bowling Green, Inc. v. State Street Bank & Trust Co.

(3)

Notes

(4)

Liability of Parties to Negotiable Instruments

(42)

Liability of Maker

(1)

Problem

(1)

Drawers, Drawees and Acceptors

(3)

Problems

(3)

Problem

(1)

Liability of Indorser

(2)

Problems

(2)

Liability of Transferor

(1)

Problem

(1)

Cashier's Checks and Teller's Checks

(16)

Use in Payment of Obligations

(1)

Problem

(1)

Payment With Notice of Adverse Claim

(1)

Right to Stop Payment

(1)

Problems

(1)

Issuing Bank Delays Payment

(1)

Problem

(1)

Issuing Bank's Right to Raise Own Claims or Defenses

(1)

State Bank & Trust v. First State Bank of Texas

(5)

Note

(1)

Problem

(1)

Lost Instruments

(1)

Lost Instruments under Section 3--309

(1)

Problem

100

(1)

Note

100

(1)

Lost Cashier's, Teller's or Certified Checks under Section 3--312

100

(1)

Diaz v. Manufacturers Hanover Trust Co.

101

(2)

Problems

103

(1)

Accommodation Parties

104

(9)

Liability of Accommodation Party and Rights Against Accommodated Party

104

(1)

Accommodated Party Is Individual

104

(1)

Problem

104

(2)

Problem

106

(1)

Accommodated Party Is Business Organization

106

(1)

Problem

106

(1)

Plein v. Lackey

107

(4)

Suretyship Defenses

111

(2)

Signatures by Representatives

113

(3)

Liability of Agent on Notes

113

(1)

Problems

114

(1)

Liability of Agent on Checks

114

(1)

Medina v. Wyche

114

(2)

Accord and Satisfaction

116

(7)

Gelles & Sons, Inc. v. Jeffrey Stack, Inc.

117

(3)

Problem

120

(1)

Notes

121

(2)

Payment Systems: Checks and Credit Cards

123

(71)

Check Collection

123

(49)

Time Check Is Paid by Payor Bank

124

(1)

The Midnight Deadline

124

(1)

Problems

124

(3)

Blake v. Woodford Bank & Trust Co.

127

(10)

Notes

137

(2)

What Is a Payor Bank?

139

(1)

Problems

139

(1)

Check Kiting

140

(1)

First National Bank in Harvey v. Colonial Bank

140

(9)

Notes

149

(1)

Effect of Regulation CC on the Midnight Deadline

150

(1)

Oak Brook Bank v. Northern Trust Company

151

(3)

Notes

154

(1)

Right of Collecting Bank to Revoke Settlement on Dishonored Check

155

(1)

Essex Construction Corporation v. Industrial Bank of Washington, Inc.

155

(3)

Note

158

(1)

Check Encoding

158

(1)

Problem

159

(1)

First Union National Bank v. Bank One, N.A.

160

(3)

Note

163

(1)

Electronic Presentment

163

(1)

Under UCC

163

(3)

Under Federal Law: ``The Check 21 Act''

166

(2)

Funds Availability and Regulation CC

168

(1)

Funds Availability

169

(1)

Check Collection and Return

170

(2)

Credit and Debit Cards

172

(22)

Introduction

172

(1)

Credit Cards

172

(1)

How Credit Cards Function

172

(2)

The Perils of Success

174

(1)

Debit Cards

174

(2)

Liability for Unauthorized Use of Cards

176

(1)

Credit Cards

176

(1)

Problems

177

(1)

Debit Cards

178

(1)

Problem

179

(1)

When Is Use Authorized?

179

(1)

Minskoff v. American Express Travel Related Services Company, Inc.

180

(6)

Notes

186

(1)

Problem

187

(1)

Assertion of Cardholder of Defenses

187

(2)

Problem

189

(1)

Izraelewitz v. Manufacturers Hanover Trust Co.

189

(2)

Notes

191

(1)

Internet Fraud

192

(1)

Problem

192

(2)

Payment Systems: Electronic Transfers

194

(40)

Electronic Funds Transfers

194

(34)

The Basic Transaction Covered by Article 4A

194

(3)

Payment Orders

197

(1)

Grossman v. Nationsbank, N.A.

197

(4)

Note

201

(1)

Problem

202

(1)

Acceptance of Payment Order

202

(1)

Problem

203

(1)

Receiver Finality

203

(1)

Aleo International, Ltd. v. Citibank

203

(2)

Notes

205

(1)

The ``Money-Back Guarantee''

206

(1)

Grain Traders, Inc. v. Citibank, N.A.

206

(7)

Notes

213

(1)

Erroneous Execution of Payment Orders

214

(1)

Sending Bank's Errors

214

(1)

Discharge-for-Value Rule

215

(1)

Failure of Receiving Bank to Execute Payment Order

216

(1)

Problems

217

(1)

Note

217

(1)

Fraudulent Payment Orders

218

(2)

Problems

220

(1)

Incorrectly Identified Beneficiary

221

(1)

Problem

221

(1)

Corfan Banco Asuncion Paraguay v. Ocean Bank

222

(3)

Note

225

(1)

Automated Clearing House (ACH)

226

(1)

Consumer Transfers

226

(1)

Commercial Transfers

227

(1)

Emerging Trends in Funds Transfers

228

(6)

Stored Value Cards

228

(2)

Internet Payments

230

(1)

Online Banking and Bill Paying

231

(3)

Fraud, Forgery, and Alteration

234

(66)

Forgery

234

(53)

Allocation of Loss Between Customer and Payor Bank

234

(1)

Introduction

234

(1)

Negligence of Customer Contributing to Forgery

235

(1)

Thompson Maple Products, Inc. v. Citizens National Bank

235

(4)

Problems

239

(1)

Failure of Customer to Report Forgery

240

(2)

Espresso Roma Corporation v. Bank Of America, N.A.

242

(6)

Notes

248

(1)

Problems

249

(1)

Note: Fraud Prevention Measures

250

(1)

Validity of Contractual ``Cutdown'' Clauses

251

(1)

National Title Insurance Corporation Agency v. First Union National Bank

252

(4)

Note

256

(1)

Right of Payor Bank to Recover Mistaken Payment of Check

256

(1)

Forged Checks

256

(1)

Problem

257

(1)

Forged Indorsement

258

(1)

Problem

258

(1)

Pre--Authorized Checks

259

(1)

Overdrafts

260

(1)

Conversion Actions Regarding Checks Bearing Forged Indorsement

260

(1)

Action by Payee

260

(1)

Introduction

260

(1)

Problem

261

(2)

Delivery of Check to Payee

263

(1)

Liability of Depositary Bank as Agent for Collection

263

(1)

Unauthorized Indorsement

264

(1)

Problem

264

(1)

Forgery by Entrusted Employee of Payee

265

(1)

Action by Drawer

266

(1)

Stone & Webster Engineering Corp. v. First National Bank & Trust Co.

267

(3)

Problem

270

(1)

Impostors and Fictitious Payees

271

(1)

Intent of Issuer

271

(2)

Impostors

273

(1)

Problems

273

(1)

Title Insurance Company of Minnesota v. Comerica Bank-California

274

(3)

Note

277

(1)

Fictitious Payees

277

(2)

The Double Forgery

279

(1)

Gina Chin & Associates, Inc. v. First Union Bank

279

(2)

Note

281

(1)

Payroll Padding

282

(1)

Allocation of Loss By Contract

283

(1)

Jefferson Parish School Board v. First Commerce Corporation

283

(3)

Problem

286

(1)

Note

286

(1)

Alteration

287

(6)

Complete Instruments

287

(1)

HSBC Bank USA v. F & M Bank Northern Virginia

288

(4)

Note

292

(1)

Incomplete Instruments

292

(1)

Restrictive Indorsements

293

(7)

Problem

294

(1)

State of Qatar v. First American Bank

294

(4)

Problem

298

(2)

The Bank--Customer Relationship

300

(45)

Introduction

300

(1)

Stop-Payment Orders

301

(11)

Proving Loss under 4--403(c)

301

(3)

Dunnigan v. First Bank

304

(6)

Operational Issues

310

(1)

Problems

310

(1)

Note: Postdated Checks

311

(1)

Section 4--303 and the ``Four Legals''

312

(6)

Claims Affecting the Customer's Account

312

(1)

Priority Rules of Section 4--303

313

(1)

W & D Acquisition, LLC v. First Union National Bank

314

(3)

Problem

317

(1)

``High-to-Low'' Basis of Posting

318

(1)

Wrongful Dishonor

319

(11)

Loucks v. Albuquerque National Bank

320

(6)

Notes

326

(4)

The Bank--Customer Agreement

330

(15)

Disclosure: The Truth--in--Savings Act

330

(3)

``Freedom of Contract'' under Section 4--103(1)

333

(1)

Problems

334

(2)

Service Charges and Fees

336

(1)

Introduction

336

(1)

Perdue v. Crocker National Bank

336

(5)

Note

341

(1)

Federal Preemption

341

(1)

Problem

342

(1)

Arbitration Clauses

342

(1)

Federal Arbitration Act

342

(1)

Unconscionability

343

(2)

Letters of Credit

345

(80)

Introduction

345

(3)

Sources of Letter of Credit Law

348

(2)

Formal Requirements

350

(5)

Wichita Eagle and Beacon Publishing Company, Inc. v. Pacific National Bank of San Francisco

351

(1)

Notes

352

(2)

Problems

354

(1)

Issuer's Duty to Honor or Dishonor

355

(35)

The Strict Compliance Standard

355

(1)

Voest-Alpine Trading USA Corp. v. Bank of China

356

(8)

Notes

364

(5)

Notice of Discrepancies: Waiver and Preclusion

369

(2)

Esso Petroleum Canada v. Security Pacific Bank

371

(5)

Note

376

(1)

Problems

376

(1)

Issuer's Right to Reimbursement and Other Remedies

377

(1)

Reimbursement

377

(1)

Standard of Compliance

378

(1)

Subrogation, Restitution and Breach of Warranty

379

(1)

Ochoco Lumber Company v. Fibrex & Shipping Company, Inc.

380

(5)

Note

385

(1)

Note: Restitution and Breach of Warranty

386

(1)

Problems

387

(1)

Damages for Wrongful Dishonor

388

(1)

Problems

389

(1)

Forgery and Fraud

390

(13)

Intraworld Industries, Inc. v. Girard Trust Bank

391

(8)

Notes

399

(4)

Problem

403

(1)

Transfer, Assignment and Security Interests

403

(7)

Transfer and Assignment

403

(3)

Problems

406

(1)

Security Interests

406

(3)

Letters of Credit as Supporting Obligations

409

(1)

Letters of Credit in Bankruptcy

410

(15)

Matter of Compton Corp.

411

(7)

Notes

418

(7)

Appendix. Promissory Notes

425

(8)

Index

433

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