Problems and Materials on Commercial Law

by Whaley, Douglas J.

• ISBN13: 9780735534810
• ISBN10: 0735534810
• Edition: 7th
• Format: Hardcover
• Copyright: 2002-12-01
• Publisher: Wolters Kluwer

Summary

This comprehensive yet concise text covers the most recent case and statutory developments in all fundamental areas of Commercial Law including sales, payment systems, and secured transactions using the distinctive problem approach for which author Douglas Whaley is so highly regarded. PROBLEMS AND MATERIALS ON COMMERCIAL LAW has achieved efficiency and effectiveness through years of classroom use: the casebook offers complete coverage of all relevant statutes and major cases in commercial law author Douglas J. Whaley, a recognized expert in teaching commercial law, keeps the text accessible, practical, and straightforward the efficient format of the book is easily adaptable to many teaching styles covers cases relating to U.C.C. Articles 2, 3, 4, and 9, As well as other relevant laws and cases well-crafted short problems progress from easy to more complex and guide students in the important task of understanding the complicated statutory language of the field the book is organized to parallel the order of coverage in the Uniform Commercial Code the accompanying Teacher's Manual supplies answers to all the problems in the book The Seventh Edition includes: changes pertaining to Payment Law, including Check Collection And The Electronic Funds Availability Act, As well as those relating to Article 9 coverage of the new Uniform Computer Information Technology Act (UCITA) and other special considerations relating To The sale of software and sales in cyberspace thorough updating of case law in all areas

Table of Contents

Preface	xxv
PART 1 SALE AND LEASE OF GOODS	1	(322)
CHAPTER 1. BASIC CONCEPTS	3	(34)
I. Introduction	3	(1)
II. Scope of Article 2	4	(28)
A. "Transactions in Goods"	4	(22)
Milau Associates, Inc. v. North Avenue Development Corp.	5	(7)
Analysts Intern. Corp. v. Recycled Paper Products, Inc.	12	(5)
Anthony Pools v. Sheehan	17	(9)
B. Merchants	26	(11)
Siemen v. Alden	26	(6)
III. Scope of Article 2A	32	(3)
IV. International Sales	35	(2)
CHAPTER 2. CONTRACT FORMATION	37	(52)
I. The Statute of Frauds	37	(11)
St. Ansgar Mills, Inc. v. Streit	39	(9)
II. The Parol Evidence Rule	48	(7)
Columbia Nitrogen Corp. v. Royster Co.	49	(6)
III. Offer and Acceptance	55	(34)
A. General Rules	55	(1)
B. The Battle of the Forms	56	(35)
Diamond Fruit Growers, Inc. v. Krach Corp.	58	(7)
Bayway Refining Co. v. Oxygenated Marketing and Trading A.G.	65	(8)
Leonard Pevar Co. v. Evans Products Co.	73	(6)
Klocek v. Gateway, Inc.	79	(10)
CHAPTER 3. WARRANTIES	89	(104)
I. The Warranty of Title	89	(2)
II. Warranties of Quality	91	(102)
A. Express Warranties	91	(3)
B. Implied Warranties	94	(16)
1. Merchantability	95	(1)
Shaffer v. Victoria Station, Inc.	95	(1)
Daniell v. Ford Motor Co.	100	(3)
2. Fitness for a Particular Purpose	103	(1)
Webster v. Blue Ship Tea Room, Inc.	105	(5)
C. Warranty Disclaimers and Limitations	110	(42)
1. Disclaiming Express Warranties	110	(1)
Bell Sports, Inc. v. Yarusso	110	(8)
2. Disclaiming Implied Warranties	118	(1)
Cate v. Dover Corp.	119	(1)
Bowdoin v. Showell Growers, Inc.	128	(1)
Rinaldi v. Iomega Corp.	133	(6)
3. Limitations on the Warranty	139	(1)
Wilson Trading Corp. v. David Ferguson, Ltd.	139	(1)
Pierce v. Catalina Yachts, Inc.	146	(6)
D. Defenses in Warranty Actions	152	(17)
1. Notice	152	(2)
2. Privity	154	(2)
3. A Note on Strict Products Liability	156	(1)
East River Steamship Corp. v. Transamerica Delaval, Inc.	158	(11)
E. UCC Warranties and the Magnuson-Moss Act	169	(14)
Ventura v. Ford Motor Corp.	171	(12)
F. Warranties and Article 2A	183	(8)
Colonial Pacific Leasing Corp. v. McNatt Datronic Rental Corp.	183	(8)
G. Warranties in International Sales	191	(2)
CHAPTER 4. TERMS OF THE CONTRACT	193	(24)
I. Filling in the Gaps	193	(6)
Landrum v. Devenport	194	(5)
II. Unconscionability	199	(2)
III. Identification of the Goods	201	(1)
IV. Risk of Loss: No Breach	202	(15)
A. General Rules	202	(2)
B. Delivery Terms	204	(14)
Cook Specialty Co. v. Schrlock	206	(3)
Rheinberg Kellerei GmbH v. Vineyard Wine Co.	209	(8)
CHAPTER 5. PERFORMANCE OF THE CONTRACT	217	(60)
I. Installment Sales	218	(4)
Cherwell-Ralli, Inc. v. Rytman Grain Co.	219	(3)
II. Perfect Tender Rule	222	(1)
III. Cure	223	(4)
Wilson v. Scampoli	224	(3)
IV. Rejection and Acceptance	227	(15)
Ramirez v. Autosport	229	(8)
Plateq Corp. of North Haven v. Machlett Laboratories, Inc.	237	(5)
V. Revocation of Acceptance	242	(14)
Rester v. Morrow	243	(13)
VI. Disk of Loss: Breach	256	(4)
Jakowski v. Carole Chevrolet, Inc.	256	(4)
VII. Impossibility of Performance	260	(17)
Arabian Score v. Lasma Arabian Ltd.	261	(5)
Louisiana Power & Light Co. v. Allegheny Ludlum Industries, Inc.	266	(11)
CHAPTER 6. REMEDIES	277	(46)
I. Special Remedies	277	(2)
A. Remedies on Insolvency	277	(1)
B. Liquidated Damages	278	(1)
C. The Breaching Buyer's Restitution	279	(1)
II. Seller's Remedies	279	(11)
A. Accepted Goods	280	(1)
B. Unaccepted Goods	280	(10)
Teradyne, Inc. v. Teledyne Industries, Inc.	282	(8)
III. Buyer's Remedies	290	(21)
A. Accepted Goods	290	(3)
B. Unaccepted Goods	293	(20)
Hughes Communications Galaxy, Inc. v. United States	294	(9)
Tongish v. Thomas	303	(8)
IV. Anticipatory Repudiation	311	(2)
V. The Statute of Limitations	313	(12)
Poli v. DaimlerChrysler Corp.	314	(9)
PART 2 PAYMENT	323	(386)
CHAPTER 7. NEGOTIABILITY	325	(28)
I. Introduction	325	(1)
II. Types of Negotiable Instruments	326	(2)
III. The Negotiability Concept	328	(25)
A. "Writing"	330	(1)
B. "Signed"	331	(1)
C. "Unconditional Promise or Order"	331	(11)
1. Implied Conditions	332	(1)
Triffin v. Dillabough	332	(9)
2. Consideration Stated	341	(1)
D. "Fixed Amount of Money"	342	(1)
E. "Courier Without Luggage" Requirement	343	(4)
Woolworth v. The Richmond Indiana Venture	344	(3)
F. "Payable on Demand or at a Definite Time"	347	(1)
G. "Payable to Bearer or to Order"	348	(2)
H. Consumer Notes	350	(3)
CHAPTER 8. NEGOTIATION	353	(8)
I. Some Technical Terms	353	(1)
A. Parties	353	(1)
B. Negotiability vs. Negotiation	354	(1)
II. Transfer and Negotiation	354	(1)
III. Special and Blank Indorsement	355	(3)
IV. Forgery of the Payee's Name	358	(3)
CHAPTER 9. HOLDERS IN DUE COURSE	361	(74)
I. Acquiring Holder in Due Course Status	361	(37)
A. "Holder"	362	(1)
B. "Value"	363	(3)
Falls Church Bank v. Wesley Heights Realty, Inc.	365	(1)
C. "Good Faith" and "Notice"	366	(23)
General Investment Corp. v. Angelini	367	(5)
Winter & Hirsch, Inc. v. Passarelli	372	(7)
Jones v. Approved Bancredit Corp.	379	(7)
Sullivan v. United Dealers Corp.	386	(3)
D. The Shelter Rule	389	(9)
Triffin v. Somerset Valley Bank	391	(7)
II. Real and Personal Defenses/Claims	398	(37)
A. Defenses Against a Holder in Due Course	398	(20)
Federal Deposit Insurance Corp. v. Culver	400	(7)
Sea Air Support, Inc. v. Herrmann	407	(2)
Kedzie & 103rd Currency Exchange, Inc. v. Hodge	409	(9)
B. A Special Note on Forgery	418	(2)
C. Procedural Issues	420	(4)
Virginia National Bank v. Holt	420	(4)
D. Defenses Against a Non-Holder in Due Course	424	(7)
Herzog Contracting Corp. v. McCowen Corp.	424	(7)
E. Jus Tertii	431	(1)
F. Conclusion	432	(3)
CHAPTER 10. THE NATURE OF LIABILITY	435	(68)
I. The Underlying Obligation	436	(7)
Ward v. Federal Kemper Insurance Co.	438	(5)
II. Liability on the Instrument	443	(58)
A. The Maker's Obligation	444	(1)
B. The Indorser's Obligation	445	(3)
C. The Surety's Obligation	448	(25)
1. Exoneration	450	(1)
2. Subrogation	450	(1)
3. Contribution	451	(1)
4. Strictissimi Juris	451	(2)
5. The Accommodation Party	453	(1)
Floor v. Melvin	455	(5)
6. Tender of Payment	460	(1)
7. Section 3-605-Strictissimi Juris Again	461	(1)
Chemical Bank v. Pic Motors Corp.	461	(1)
London Leasing Corp, v. Interfina, Inc.	469	(3)
8. New Notes for Old	472	(1)
D. The Drawer's Obligation	473	(12)
1. Presentment and Dishonor	474	(1)
Messing v. Bank of America, NA.	475	(5)
2. Notice of Dishonor	480	(1)
3. Protest	481	(1)
4. Excuse	481	(1)
Makel Textiles, Inc. v. Dolly Originals, Inc.	483	(2)
E. The Drawee's Obligation	485	(7)
1. The Non-Bank Acceptor	486	(1)
Norton v. Knapp	486	(3)
2. Checks	489	(1)
Galyen Petroleum Co. v. Hixson	489	(3)
3. Certification	492	(1)
F. Signature by an Agent	492	(12)
Mundaca Investment Corp, v. Febba	494	(4)
Nichols v. Seale	498	(3)
III. Other Theories of Liability	501	(2)
CHAPTER 11. BANKS AND THEIR CUSTOMERS	503	(78)
I. The Checking Account	504	(30)
A. "Properly Payable" Rule	504	(4)
B. Wrongful Dishonor	508	(5)
Twin City Bank v. Isaacs	508	(5)
C. Death or Incompetence of Customer	513	(1)
D. Bank's Right of Setoff	514	(6)
Walter v. National City Bank of Cleveland	516	(4)
E. Customer's Right to Stop Payment	520	(12)
1. Ordinary Checks	520	(1)
Parr v. Security National Bank	521	(1)
Canty v. Vermont National Bank	525	(5)
2. Cashiers, Tellers, and Certified Checks	530	(2)
F. Bank Statements	532	(2)
II. Bank Collection	534	(47)
A. Funds Availability	535	(12)
1. Cash	535	(1)
2. Checks	536	(11)
B. Final Payment	547	(13)
Rock Island Auction Sales, Inc. v. Empire Packing Co.	550	(4)
First National Bank of Chicago v. Standard Bank & Trust	554	(6)
C. Check Return	560	(2)
D. Charge Back	562	(12)
Gordon v. Planters & Merchants Bancshares, Inc.	563	(11)
E. Undoing Final Payment	574	(2)
F. Restrictive Indorsements and Banks	576	(1)
G. Delays	577	(1)
H. Priorities in the Bank Account: The Four Legals	578	(3)
CHAPTER 12. WRONGDOING AND ERROR	581	(60)
I. Forgery of the Payee's Name	582	(12)
A. Some Basic Ideas	582	(2)
B. Warranty Liability	584	(3)
C. Conversion Liability	587	(7)
Leeds v. Chase Manhattan Bank, N.A.	589	(5)
II. Forgery of the Drawer's Name	594	(10)
Price v. Neal	595	(4)
Decibel Credit Union v. Pueblo Bank & Trust Co.	599	(5)
III. Validation of the Forgery	604	(33)
A. Common Law Validation	606	(6)
Hutzler v. Hertz Corp.	606	(6)
B. The Impostor Rule	612	(2)
C. The Employee Indorsement Rule	614	(2)
D. The Negligence Rule	616	(10)
The Bank/First Citizens Bank v. Citizens and Associates	617	(9)
E. The Bank Statement Rule	626	(16)
Falk v. Northern Trust Co.	627	(10)
IV Alteration	637	(4)
CHAPTER 13. ELECTRONIC BANKING	641	(44)
I. The Electronic Fund Transfer Act	642	(9)
A. Credit Cards	643	(1)
B. Asserting Defenses Against the Credit Card Issuer	644	(1)
C. Billing Errors	645	(1)
D. Electronic Fund Transfers and the Consumer	645	(6)
II. Wire Transfers	651	(34)
A. Scope of Article 4A	653	(2)
B. Acceptance of Payment Orders	655	(2)
C. Transmission Errors	657	(26)
Grain Traders, Inc. v. Citibank, NA.	658	(11)
Corfan Banco Asuncion Paraguay v. Ocean Bank	669	(7)
Bank of America N.T.S.A. v. Sanati	676	(7)
D. Conclusion	683	(2)
CHAPTER 14. INVESTMENT SECURITIES	685	(24)
I. Terminology	686	(3)
II. Overissue	689	(1)
III. The Issuer and the Holder	690	(4)
First American National Bank v. Christian Foundation Life Insurance Co.	690	(4)
IV. Transfers Between Purchasers	694	(1)
V. Registration	695	(8)
Jennie Clarkson Home for Children v. Missouri, Kansas & Texas Railway	697	(6)
VI. Security Entitlements	703	(8)
Powers v. American Express Fin. Advisors, Inc.	704	(5)
PART 3 PAYMENT IN DOCUMENTED SALES	709	(94)
CHAPTER 15. DOCUMENTS OF TITLE	711	(58)
I. Warehouse Receipts	712	(11)
A. Form	712	(2)
B. Basic Bailment Law	714	(6)
Procter & Gamble Distributing Co. v. Lawrence American Field Warehouse Corp.	714	(4)
Dunfee v. Blue Rock Van & Storage, Inc.	718	(2)
C. Bailee's Lien	720	(1)
D. Delivery Orders	721	(1)
E. Terminology: The Issuer	722	(1)
II. Bills of Lading	723	(21)
A. Federal Law	723	(1)
B. The Basic Idea	723	(12)
BII Finance Co. v. U -States Forwarding Services Corp.	724	(11)
C. Form	735	(4)
1. Negotiable	735	(1)
2. Non-Negotiable	736	(3)
D. Misdescription	739	(5)
GAC Commercial Corp. v. Wilson	740	(4)
III. Due Negotiation	744	(14)
A. The Basic Concept	744	(5)
Cleveland v. McNabb	745	(4)
B. The Section 7-503(1) Owner	749	(8)
Agricredit Acceptance, LLC v. Hendrix	751	(6)
C. Other Transfers	757	(1)
IV. Collection Through Banks	758	(11)
A. "Payment Against Documents"	758	(4)
B. Liability of the Collecting Bank	762	(12)
Rheinberg Kellerei GmbH v. Brooksfield National Bank of Commerce	762	(7)
CHAPTER 16. LETTERS OF CREDIT	769	(34)
I. The Basic Problem	770	(3)
II. Definitions and Scope of Article 5	773	(1)
III. The Issuer-Duties and Rights	774	(31)
Voest-Alpine Trading Co. v. Bank of China	775	(12)
Sztejn v. J. Henry Schroder Bank Corp.	787	(5)
Intrinsic Values Corp. v. Superintendencia De Administration Tributaria	792	(3)
Ochoco Lumber Co. v. Fibrex & Shipping Co., Inc.	795	(8)
PART 4 SECURED TRANSACTIONS	803	(308)
CHAPTER 17. INTRODUCTION TO SECURED TRANSACTIONS	805	(16)
I. Bankruptcy	808	(2)
II. Pre-Code Security Devices	810	(11)
Benedict v. Ratner	810	(12)
A. Pledge	815	(1)
B. Chattel Mortgage	815	(1)
C. Conditional Sale	816	(1)
D. Trust Receipt	817	(1)
E. Factor's Lien	817	(1)
F. Field Warehousing	818	(3)
CHAPTER 18. THE SCOPE OF ARTICLE 9	821	(28)
I. Security Interest Defined	821	(1)
II. Consignments	822	(5)
In re Fabers, Inc.	824	(3)
III. Leases	827	(11)
In re Architectural Millwork of Virginia, Inc.	830	(8)
IV. Other Transactions	838	(1)
V. Exclusions from Article 9	839	(10)
A. Federal Statutes	839	(6)
Philko Aviation, Inc. v. Shacket	840	(5)
B. Landlord's Lien and Other Statutory Liens	845	(1)
C. Wage Assignments	845	(1)
D. Non-Financing Assignments	846	(1)
E. Real Estate	846	(1)
F. Other Exclusions	847	(2)
CHAPTER 19. THE CREATION OF A SECURITY INTEREST	849	(30)
I. Classifying the Collateral	849	(10)
In re Morton	851	(5)
Morgan County Feeders, Inc. v. McCormick	856	(3)
II. Technical Validity of the Forms	859	(8)
A. The Security Agreement	860	(1)
B. The Financing Statement	861	(1)
C. The Debtor's Identity	862	(2)
D. Description of the Collateral	864	(3)
III. Attachment of the Security Interest	867	(12)
Thrift, Inc. v. A.D.E., Inc.	868	(5)
In re Howell Enterprises, Inc.	873	(6)
CHAPTER 20. PERFECTION OF THE SECURITY INTEREST	879	(34)
I. Perfection by Possession (Pledge)	880	(2)
II. Automatic Perfection	882	(26)
A. Purchase Money Security Interest in Consumer Goods	883	(20)
In re Short	884	(10)
General Electric Capital Commercial Automotive Finance, Inc. v. Spartan Motors, Ltd.	894	(9)
B. Certain Accounts and Other Intangibles	903	(5)
In re Wood	904	(4)
III. Perfection by Filing	908	(4)
A. The Mechanics of Filing	909	(1)
B. Other Filings	910	(2)
IV. Perfection by Control	912	(1)
CHAPTER 21. MULTI-STATE TRANSACTIONS	913	(6)
I. General Choice of Law Rules	913	(3)
II. Certificates of Title	916	(3)
CHAPTER 22. PRIORITY	919	(116)
I. Simple Disputes	919	(11)
In re Wollin	923	(7)
II. Purchase Money Security Interests	930	(18)
A. The Basic Rule	930	(5)
Galleon Industries, Inc. v. Lewyn Machinery Co.	931	(4)
B. Inventory and Livestock	935	(13)
Kunkel v. Sprague National Bank	936	(12)
III. Control and Priority	948	(4)
A. Control Over Investment Property	948	(2)
B. Control Over Deposit Accounts	950	(1)
C. Control Over Letters of Credit Rights	950	(2)
IV. Buyers	952	(30)
International Harvester Co. v. Glendenning	953	(6)
First National Bank and Trust Co. of El Dorado v. Ford Motor Credit Co.	959	(8)
Clovis National Bank v. Thomas	967	(9)
Farm Credit Bank of St. Paul v. F & A Dairy	976	(6)
V. Leases	982	(1)
VI. Article 2 Claimants	983	(11)
In re Arlco, Inc.	985	(9)
VII. Statutory Lien Holders	994	(1)
VIII. Fixtures	995	(16)
George v. Commercial Credit Corp.	996	(4)
Lewiston Bottled Gas Co. v. Key Bank of Maine	1000	(6)
Maplewood Bank & Trust v. Sears, Roebuck & Co.	1006	(5)
IX. Accessions and Commingling	1011	(1)
X. Federal Priorities for Debts and Taxes	1012	(23)
A. The Federal Priority Statute	1012	(2)
B. Tax Liens-Basic Priority	1014	(10)
United States v. Estate of Romani	1014	(10)
C. Tax Liens and After-Acquired Property	1024	(9)
Plymouth Savings Bank v. U.S. I.R.S.	1026	(7)
D. Tax Liens and Future Advances	1033	(2)
CHAPTER 23. BANKRUPTCY AND ARTICLE 9	1035	(20)
I. The Trustee's Status	1035	(2)
II. Preferences	1037	(5)
III. The Floating Lien in Bankruptcy	1042	(9)
In re Smith's Home Furnishings, Inc.	1043	(8)
IV. Fraudulent Transfers	1051	(1)
V. Non-Consensual Liens and the Trustee	1052	(3)
CHAPTER 24. PROCEEDS	1055	(18)
I. The Meaning of Proceeds	1055	(5)
Farmers Cooperative Elevator Co. v. Union State Bank	1056	(4)
II. Priorities in Proceeds	1060	(13)
HCC Credit Corp. v. Springs Valley Bank & Trust Co.	1061	(12)
CHAPTER 25. DEFAULT	1073	(38)
I. Pre-Default Duties of the Secured Party	1073	(2)
II. Default	1075	(11)
State Bank of Piper City v. A-Way, Inc.	1075	(6)
Klingbiel v. Commercial Credit Corp.	1081	(5)
III. Repossession and Resale	1086	(18)
Williamson v. Fowler Toyota, Inc.	1087	(8)
Hilliman v. Cobado	1095	(9)
IV. Redemption and Strict Foreclosure	1104	(7)
Reeves v. Foutz & Tanner, Inc.	1106	(5)
Table of Cases	1111	(10)
Table of Statutes	1121	(14)
Index	1135