Introduction to Philosophy GCC Spring 2005 s1

AAMPLE

Negotiable Instruments

Summer 2009

Syllabus

Instructor: Scott DeVito, J.D., Ph.D. Email: [email protected]

Required Resources

(1) Negotiable Instruments and Other Payment Systems: Problems and Materials, Wayne K. Lewis, Steven H. Resnicoff (LexisNexis 2004)

(2) Selected Commercial Statutes For Payment Systems Courses, Advisory Panel Carol L. Chomsky, Christina L. Kunz, Linda J. Rusch, and Elizabeth R. Schiltz (Thomson/West 2008)

Overview of Course

This course explores the law governing negotiable instruments -- that is, promissory notes, checks, drafts, traveler’s checks. The course is taught from a set of problems contained in Lewis & Resnicoff, Negotiable Instruments and Other Payment Systems: Problems and Materials, Wayne K. Lewis, Steven H. Resnicoff (LexisNexis 2004). The only other required book is Selected Commercial Statutes.

This course discusses two types of negotiable orders: promissory notes and drafts. A promissory note is a promise to repay a debt, typically issued to a creditor from whom a debtor has borrowed money or purchased goods or property, and sometimes given as collateral. A draft is a payment order, typically issued to pay an obligation. A check is a type of draft. Though both are negotiable instruments, their different functions give rise to some different as well as some common problems in the commercial world.

You may already have learned that in most circumstances, the buyer of something acquires only the rights the seller had in the thing, and that if the seller had no rights (i.e., was a thief), the buyer received no rights. Negotiable instruments law departs from that model, making it possible for a buyer of a negotiable instrument to acquire substantially greater rights than the seller held, and, therefore, to enforce payment even though the seller could not have enforced the instrument. Not surprisingly, we will study when transferees acquire greater rights, and how it is that one can sometimes acquire title to a negotiable instrument through a thief.

Many would-be borrowers and buyers cannot offer sufficient evidence of their ability to repay to entice a lender or seller to extend credit. In such circumstances, a creditor typically demands that someone else co-sign the note -- that is, also undertake to repay the obligation. We call that person a surety, or, in the language of negotiable instrument law, an accommodation party. 1 Imagine an eighteen year old who wants to buy a car on credit, or a small corporate business borrowing operating capital. The car dealer wants greater repayment assurance than the eighteen year old can offer, and demands that a parent co-sign the note. The bank knows enough about corporation law to worry about the corporation filing for bankruptcy, and therefore demands that principal stockholders personally guarantee the debt.

Many if not most suretyship agreements involve the signing of negotiable instruments. It is therefore convenient to learn suretyship law within this course, and we will do that, focusing on the special protections given to sureties who sign instruments, and how those protections can be lost.

Checks commonly are used to pay for goods and services. We will explore the rights of the various parties to a check, taking into account the many things that can go wrong, ranging from the delivery of defective goods to the theft of a check from the payee to the theft of a checkbook from the account holder. Here we enter a world of thieves, embezzlers, forgers, and innocent folks whose business transactions go sour. We will explore the rights of the parties to checks in these circumstances. Because the bad guys usually spend their ill-gotten gains before we can catch them, we will learn how the UCC allocates losses in the event of wrongdoing, discovering which of the innocent parties to a transaction will be, to coin a term, the “stuckee.”

Course Objectives

This course has several primary objectives falling under three categories:

1. Course content

Introduce students to key negotiable instrument theories and principles.

2. Law school skills

Develop ability to successfully outline course content and take law school exams.

3. Lawyering skills

Reinforce and expand ability to issue spot. Sharpen critical reading, writing, and thinking skills. Increase precision of language use while utilizing legal rules/principles. Promote student’s ability to self-teach.

Course Expectations

The Online AAMPLE program requires active student participation. The completion of assignments and participation in class discussion are not only critical for the success of the students who participate, in online educational courses, the entire class discussion is often dependent upon the completion of assignments by the designated student. In addition, the quizzes designed for each course test each student's grasp of assigned materials, providing critical evaluation of the student's level of understanding.

2 There will be two Negotiable Instruments quizzes and practice essays administered during the Online AAMPLE program. The scores that you receive on the quizzes and essays will not be factored into the grade you receive for this course. You should use the quizzes to gauge your understanding of the material tested.

We expect you to: 1) timely prepare each day’s problems, 2) timely post assignments as required, 3) actively participate in discussion boards linked to each set of assignments, 4) attend and participate in the scheduled chat sessions and 5) take the quizzes.

It is therefore a requirement of the Online AAMPLE program that students take the course quizzes and essays, and participate in assigned course activities. Penalties will be imposed upon students who fail to meet this requirement. All deadlines given in the weekly assignment modules are given in Eastern Daylight Time; they are only deadlines, and you should not wait until those deadlines approach to complete or post the assigned work.

Any student who accumulates three penalty points for nonparticipation during the Online AAMPLE program will be administratively dismissed from the program. Such students will be denied access to the program from the point of dismissal, including a prohibition from taking the final exam. Students will be assessed penalty points for nonparticipation under the following circumstances:

(1) Any student who fails to take a quiz shall be deemed to have one non-participation penalty point for each quiz not taken. No warnings are required to students who fail to take quizzes.

(2) Any student who fails to attend a scheduled chat session shall be deemed to have one non- participation penalty point for each chat session missed. No warnings are required to students who fail to attend chat sessions.

(3) Any student who fails to satisfactorily participate in an assignment will be deemed to have a non-participation penalty point. The professor who believes that a student has not in good faith completed an assigned task shall inform the student that he/she has earned this penalty. The determination of good faith completion of a task will be solely in the discretion of the professor.

(4) Any student who is unprepared to discuss the assigned material during class shall be deemed to have one non-participation penalty for that class.

(5) Any student who is absent, without adequate excuse, adequacy to be determined by the Professor, shall be deemed to have one non-participation penalty for that class.

Course Grade

Your grade in the class will be determined entirely by your performance on a three-hour written closed book examination at the end of the course. That examination will present you with problems somewhat like those you do each day, but without suggested code sections or a copy of the code. Your task on the exam will be to apply the doctrine we study to solve those problems, explaining fully how you reached your conclusion. You will not be required to know UCC section numbers or to quote from memory the text of the UCC; rather, you will be expected to recognize the issues posed by the given facts, paraphrase the applicable rules provided by

3 the UCC, and apply them, explaining their application. Your grade will not take into account your writing style, errors in punctuation, grammar, spelling or syntax.

As you have already heard, we do not grade the exam on a curve, or allocate grades by any formula; all of you can earn A’s, and all of you can earn D’s.

Honor Code

The Florida Coastal School of Law (“FCSL”) Honor Code is strictly enforced. The Honor Code may be found in the Student Handbook, attachment # 1 (p. 48 - 59); located at http://www.fcsl.edu/node/277.

Revisions

This syllabus is subject to revision at the Professor’s discretion or to correct any error in its content.

Weekly Assignments

Week One: May 19 – May 21

Chapter 1: An Introduction to Negotiable Instruments Law

Read: Pages 1-7

Chapter 2: Negotiation

Read: Pages 9-27

Do: Problems 2.2, 2.3, 2.5, 2.6, 2.7, 2.8(a)-2.8(h), 2.9, 2.10

Chapter 3: The Life of an instrument

Read: pages 29-46

Do: Problems 3.1, 3.2, 3.3, 3.4, 3.5

Chapter 4: Parties Entitled to Enforce an Instrument

Read: Pages 47-52

Do: Problems 4.1, 4.2, 4.3, 4.4, 4.5

PowerPoint:

Run: PowerPoint 1: IRAC and Outlining PowerPoint 2: Agency PowerPoint 3: Negotiation

4 PowerPoint 4: Life of an Instrument

Practice Essay

Turn in: Practice Essay 1 (Saturday May 22 – by Midnight)

Week Two: May 26 – May 28

Chapter 5: Liability on an Instrument

Read: Pages 53-71

Do: Problems 5.1, 5.2, 5.3, 5.4, 5.5, 5.6, 5.8, 5.9, 5.12, 5.13, 5.15, 5.16, 5.17, 5.18, 5.20

Chapter 6: Liability on an Instrument Signed by an Agent

Read: Pages 73-78

Do: Problems 6.1, 6.2, 6.4, 6.5(a)-6.5(d)

Chapter 7: Accommodation Parties

Read: Pages 81-88

Do: Problems 7.1, 7.2, 7.4, 7.6

PowerPoint:

Run: PowerPoint 2: Agency PowerPoint 5: Liability on an Instrument PowerPoint 6: Sureties PowerPoint 7: Accommodation Parties

Practice Essay

Review: Practice essay 1

Practice Quiz

Turn in: Quiz 1 (Saturday May 30 – by Midnight)

Week 3: June 2 & June 4

Chapter 9: The Holder in Due Course Doctrine

Read: Pages 115-144

Do: Problems 9.1, 9.2, 9.4, 9.7, 9.8, 9.9, 9.10, 9.11, 9.12, 9.13, 9.14, 9.15

Chapter 8: A Defendant’s Responses to a Suit to Enforce an Instrument

Read: Pages 89-100 5 Do: Problems 8.1, 8.2, 8.3, 8.4, 8.5, 8.6, 8.7

PowerPoint:

Run: 8. Contract modification 9. Consideration 10. Warranties 11. Statute of Frauds 12. Fraud 13. Infancy 14. Duress 15. When is someone a fiduciary?

Practice Quiz

Review: Practice quiz 1

Turn in: Practice Quiz 2 (Saturday June 6 – by Midnight)

Chapter 10: Warranty Liability

Read: Pages 145-159

Do: Problems 10.1, 10.2, 10.3, 10.4, 10.5, 10.6, 10.7, 10.8, 10.9, 10.10, 10.11, 10.12, 10.13, 10.14, 10.15

Chapter 11: Conversion Liability

Read: Pages 161-170

Do: Problems 11.1, 11.2, 11.3, 11.4, 11.5, 11.6, 11.7, 11.8, 11.9, 11.10

PowerPoint:

Run: 10. Warranties 16. Conversion

Practice Quiz

Review: Practice quiz 2

Practice Essay

Turn in: Practice Essay 2 (Saturday June 13 – by Midnight)

Chapter 14: Wrongful Dishonor

6 Read: Pages 199-205

Do: Problems 14.1, 14.2, 14.3, 14.4, 14.5

Chapter 16: Special Problems: Forgeries and Missing Signatures

Read: Pages 221-229

Do: Problems 16.1, 16.2, 16.3, 16.4, 16.5, 16.6, 16.7, 16.8, 16.9, 16.10

Chapter 17: Unauthorized Signatures and Alterations Treated as if They Were Authorized

Read: Pages 231-247

Do: Problems 17.2, 17.3, 17.4, 17.6, 17.7, 17.10, 17.11, 17.12, 17.13, 17.14, 17.15

PowerPoint:

Run: 17. Emotional distress 18. Negligence

Practice Essay

Review: Practice essay 2

Exam Preparation

Discuss: Exam Review Questions and other topics for Final Exam which will be administered on June 22, 2009.