Negotiable Instruments (Essay) Flashcards
Retailer v. Manufacturer
Issue 1: whether retailer and manufacturer have an enforceable contract?
a. UCC governs contracts for the sale of goods.
b. A contract must include an offer, acceptance, and consideration.
c. A contract for the sale of goods requires the offer to include all essential terms- quantity and parties.
d. Under UCC 2-207, a seller can accept a buyer’s offer to purchase goods for prompt or current shipment by shipping nonconforming goods.
e. UCC specifies that the nonconforming shipment constitutes a valid acceptance, which creates a binding contract.
f. No effective acceptance if acceptance is expressly made conditional on assent to the additional or different terms.
g. Florida recognizes a contractual relationship as long as there is either a benefit or a detriment to at least one party.
Retailer v. Manufacturer
Issue 2: What terms govern the existing contract between retailer and manufacturer.
In a transaction between merchants, additional terms become part of the contract unless 1) the offer expressly limits acceptance to the terms of the contract; 2) the offeror objects to the additional terms within a reasonable time after receiving notice of the term; or 3) the additional terms materially alter the contract.
Retailer v. Manufacturer
Issue 3: Whether manufacturer properly modified the agreement to reflect a $200 price increases per driver.
Under the UCC, an existing contract for the sale of goods needs no consideration to be binding; however, they must be in good faith.
Retailer v. Manufacturer
Issue 4: whether retailer or manufacturer breached the agreement by failing to abide by the other’s contract terms.
a. Breach of contract occurs when one party has performed and the other party has failed to perform or has performed inadequately.
b. UCC follows the perfect tender rule, meaning that contract terms are enforced exactly.
Retailer v. Manufacturer
Issue 5: What relief retailer will likely receive from manufacturer.
Buyer is entitled to the contract-market differential- that is, the difference between what the buyer would have paid under the contract and the market price of the goods at the time the buyer learned of the breach.
Retailer v. Manufacturer
Issue 6: Whether the promissory note was negotiable.
To be negotiable, an instrument must be a promise or order, and therefore be in writing and signed, contain an unconditional promise or order, pay a fixed amount of money, be payable to order or to bearer at the time it is issued or first comes into possession of a holder, be payable on demand or at a definite time, and contain no additional undertakings except as authorized by the UCC
Retailer v. Manufacturer
Issue 7: Whether the promissory note has been properly negotiated and what retailer’s rights are regarding the instrument.
a. A holder or a holder in due course is a person entitled to enforce a negotiable instrument.
b. A holder in due course is a purchaser who takes the instrument for value, in good faith, and without notice.
c. Good faith means that the holder of a negotiable instrument must have taken it without actual knowledge or reason to know of some defect.
d. The shelter doctrine protects a holder who receives an instrument from a holder in due course, also giving them holder in due course status.
Sam and Mac
Issue 1: What type of paper is it and who are the parties?
Sam and Mac
Issue 2: Whether the promissory note was negotiable?
To be negotiable, an instrument must be a promise or order, and therefore be in writing and signed, contain an unconditional promise or order, pay a fixed amount of money, be payable to order or to bearer at the time it is issued or first comes into possession of a holder, be payable on demand or at a definite time, and contain no additional undertakings except as authorized by the UCC
Sam and Mac
Issue 4: Does Sam have any defenses?
Real defenses may be raised against a HDC, however personal defenses cannot be raised against a HDC.
Real defenses include, infancy, incapacity, duress, illegality, fraud in the factum, or other discharges.
Fraud in the Factum is when the party signed without knowing the nature of the instrument PLUS excusable ignorance.
Sam and Mac
Issue 3: Whether the promissory note has been properly negotiated?
a. A holder or a holder in due course is a person entitled to enforce a negotiable instrument.
b. A holder in due course is a purchaser who takes the instrument for value, in good faith, and without notice.
c. Good faith means that the holder of a negotiable instrument must have taken it without actual knowledge or reason to know of some defect.
d. The shelter doctrine protects a holder who receives an instrument from a holder in due course, also giving them holder in due course status.
