StudentShare
Contact Us
Sign In / Sign Up for FREE
Search
Go to advanced search...
Free

Uniform Commercial Code and Negotiable Instruments - Essay Example

Cite this document
Summary
In the paper "Uniform Commercial Code and Negotiable Instruments", the problem under scrutiny would be handled under the “Negotiable Instruments”.  In January 2007, Jupiter Automobile Dealer (Jupiter) took a loan of $ 1000000 from a bank to build a new auto service facility. …
Download full paper File format: .doc, available for editing
GRAB THE BEST PAPER96.2% of users find it useful
Uniform Commercial Code and Negotiable Instruments
Read Text Preview

Extract of sample "Uniform Commercial Code and Negotiable Instruments"

The loan was sanctioned under a promissory note and a deed of trust. Monthly payments of interest were to be given time and the principal balance was due on January 1, 2010.

            By January 2010, 16 of the 24 due interest payments were made in an untimely fashion. The last three payments prior to January 2010 had not been made.

            In November 2009, the Dealer contacted a loan officer of the Bank and said that he would be unable to pay the principal as required under the note on January 1, 2010. Also, he said that he would be willing to sell the Dealership to a third party. The loan officer verbally said that the Bank would not foreclose or sue on the promissory note as long as the note was paid when the Dealership was sold, but not later than September 1, 2010.

Issue Spotting and Legal Analysis

            Issue 1: The Dealer had contacted a loan officer of the Bank and attempted a verbal settlement.

            Analysis: The promissory note and the deed of trust both contained the following clause: “Any amendment hereto or modification hereof must be in writing signed by both parties. Any waiver or indulgence of any default by Dealer shall not operate as a waiver of any subsequent default. Time is of the essence hereof.” Clearly, the Dealer was able only to reach a verbal settlement with the bank officer, so his liability exists and he can be prosecuted for not making a written negotiation.

            Issue 2: The promissory note called for monthly payments of interest but 16 of the 24 interest payments due under the note had been made untimely. Moreover, the last three payments had not been paid at all.

            Analysis: The clause included both in the promissory note and the deed of trust clearly states that “Time is of the essence hereof” Therefore, the Dealer can be prosecuted for

  1. Failure to pay the interest
  2. Failure to make timely payments
  3. Failure to pay off the principal

Issue 3: During the untimely interest payments, the Bank should have cautioned or warned the Dealer in time. Moreover, the Bank could have taken early steps to avoid the case of non-repayment.

      Analysis: It is astonishing that the bank did not take action in time. The bank could have sought legal help against the Dealer earlier too. In such circumstances, the role of the concerned lean officer should be examined by the court.

Conclusion

            The case may be dealt with under the U.C.C. Article 3 on Negotiable Instruments. The article is composed of the following parts
PART 1: GENERAL PROVISIONS AND DEFINITIONS,
PART 2: NEGOTIATION, TRANSFER, AND INDORSEMENT,
PART 3: ENFORCEMENT OF INSTRUMENTS,
PART 4: LIABILITY OF PARTIES,
PART 5: DISHONOR, and
PART 6: DISCHARGE AND PAYMENT
as stated by the website “Cornell Law School … Lawyers in the Best Sense” under the auspices of the American Law Institute and the National Conference of Commissioners on United States Laws. Needless to say, this article is equipped with a strong framework to prevent unfair and unreliable financial action and prosecute the wrongdoer.

Read More
Cite this document
  • APA
  • MLA
  • CHICAGO
(“Exam 2 Essay Example | Topics and Well Written Essays - 500 words”, n.d.)
Exam 2 Essay Example | Topics and Well Written Essays - 500 words. Retrieved from https://studentshare.org/miscellaneous/1569097-exam-2
(Exam 2 Essay Example | Topics and Well Written Essays - 500 Words)
Exam 2 Essay Example | Topics and Well Written Essays - 500 Words. https://studentshare.org/miscellaneous/1569097-exam-2.
“Exam 2 Essay Example | Topics and Well Written Essays - 500 Words”, n.d. https://studentshare.org/miscellaneous/1569097-exam-2.
  • Cited: 0 times

CHECK THESE SAMPLES OF Uniform Commercial Code and Negotiable Instruments

Financial Leasing in the Context of Uniform Commercial Code of the United States

Financial Leasing also called Capital Leasing is a purchasing strategy normally employed to acquire assets that allow purchasing organizations or parties to spread the cost of acquisition in the form of rental thereby expensing it at the onset.... .... ... ... Although considered as an actual sale in normal accounting standards ownership of the asset in question is held by the lessor until the end of the term of the Financial Lease....
17 Pages (4250 words) Essay

Case Study on Kind Checks Cashed, Inc.Talcott

negotiable instruments and the Holder in Due Course.... ?? negotiable instruments 14.... “Comparison of Instruments Law with Article 3 of the Proposed commercial code.... Good faith refers to being honest and observing commercial standards of fair dealing in every transaction undertaken (Chan-Hyung 54).... “Holder in Due Course of commercial Paper under the U.... ?? commercial Law 13.... ?? commercial Law 5....
2 Pages (500 words) Case Study

Elements of a Negotiable Instrument

Through this rule, the instrument shall then fail the test of negotiability under the uniform commercial code and hence invalid.... The uniform commercial code establishes a number of types of negotiable instruments; drafts, checks, certificates of deposit and notes.... Does the instrument in question meet the requirements of negotiability under the uniform commercial code?... This question can best be dealt with by comparing the elements of a negotiable instrument under the uniform commercial code with the instrument in question....
2 Pages (500 words) Essay

Overview of Commercial Code

Commonly, the aspects of private laws that will be included in a commercial code includes but not limited to “sales of goods, leases of goods, business contractual agreements, negotiable instruments, fiscal deposits, letters of credit, investment securities, among others”5.... This paper therefore addresses the question of whether or not the United Kingdom needs such a commercial code that have been practiced and used in other jurisdictions including Germany and Turkey....
15 Pages (3750 words) Essay

The Effects of the Universal Commercial Code

he uniform commercial code (UCC) is arguably the most significant development of the American Law, which offers comprehensive ways of addressing issues of commercial business.... The code received its first publication in.... Adoption of the code as remained free of choice among states and each state has the option of adopting or rejecting this law (Liuzzo, 2010).... The drafts and text of the code are written by commercial law experts and submitted to the Uniform Law commissioners in collaboration with American Law institute for approval....
7 Pages (1750 words) Research Paper

The Historical Development of Payment Systems from Cash to Negotiable Instrument

The trading activities conducted in the foreign exchange market are rapidly developing the new payment systems, which are highly influenced by the advancement in financial instruments.... The payment system comprises various instruments, banking procedures along with the interbank transfer of funds to regulate the transfer of funds both nationally and internationally environment.... The payment instrument varies from nation to nation, some common payment instruments include, commercial papers, bonds, cheques, credit and debit cards, electronic money that makes it convenient for the trades to trade in smoother and efficiently...
20 Pages (5000 words) Research Paper

The Requirement of Good Faith for Becoming a Holder in Due Course

he HDC doctrine was implemented by the Article of the uniform commercial code (Maggs 1).... A holder in due course takes negotiable instruments free of any prevailing claims as well as most of other parties' defenses.... The Article also governs some negotiable instruments like promissory notes and checks.... This is done against the charges, Problems could arise in a situation whereby the holder seeking payment out of a negotiable instrument comes to learn that a certain defense to the payment exists....
2 Pages (500 words) Research Paper

The Uniform Commercial Code

The uniform commercial code (UCC) is a particular set of law in the United States (US) that has been formed by the government of the nation in order to govern the commercial business domain of the country.... Furthermore, owing to the prevalence of diverse range of rules and regulations regarding business in various states of the US, there was an extreme lack of uniformity and balance in legal structure, which has one way or the other had hindered effective performance of the business units and traders (SBA, “uniform commercial code”)....
23 Pages (5750 words) Research Paper
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.
Contact Us