Draft of Legal Notice for Breach of Contract - PowerPoint

Document Sample
Draft of Legal Notice for Breach of Contract - PowerPoint Powered By Docstoc
					       Click your mouse anywhere on the screen to advance the
       text in each slide. After the starburst appears, click a
       blue triangle to move to the next slide or previous slide.
                                                                    23
    Business Law and the Legal Environment
1
         Quote of the Day
         “A negotiable bill or note is a
           courier without luggage.”
                               John B. Gibson,
                         Overton v. Tyler, 1846




                                                  23
    Business Law and the Legal Environment
2
           Commercial Paper
     Commercial paper is a contract to pay
      money.
     It can be:
        • A Substitute for Money
        • A Loan of Money



                                               23
      Business Law and the Legal Environment
3
             Promissory Note
     The possessor of a piece of commercial
       paper has an unconditional right to be
       paid, as long as:
        • the paper is negotiable;
        • it has been negotiated to the possessor;
        • the possessor is a holder in due course;
          and
        • the issuer cannot claim any of the limited
          number of “real” defenses.                   23
      Business Law and the Legal Environment
4
    Types of Negotiable Instruments
     Note (also called a promisory note) is a
       promise to pay money.
        • Certificate of Deposit (CD) is a note made
          by a bank.
     Draft is an order directing someone else
       to pay money for you (e.g., checks).
        • Cashier‟s check -- a draft drawn by a bank
          on its own account.
        • Traveler‟s check -- a draft issued by and
          paid by the same company (such as
          American Express)
                                                       23
      Business Law and the Legal Environment
5
                   Rights
     The possessor of non-negotiable
      commercial paper has the same rights--
      no more, no less--as the person who
      made the original contract.
     The possessor of negotiable
      commercial paper has more rights than
      the person who made the original
      contract.
                                               23
      Business Law and the Legal Environment
6
    Requirements for Negotiability
     The Instrument Must:
       • Be in Writing.
       • Be Signed by the Maker or Drawer.
       • Contain an Unconditional Promise or Order
         to Pay.
       • State a Definite Amount of Money.
       • Be Payable on Demand or at a Definite
         Time.
       • Be Payable to Order or to Bearer.
                                                     23
      Business Law and the Legal Environment
7
                  Definitions
     Trade acceptance -- draft drawn by a
        seller of goods on the buyer and
        payable to the sell or some third party
       Sight draft -- payable on demand
       Time draft -- payable at some particular
        time in the future
       Order paper -- payable to the named
        person or anyone designated by that
        named person
       Bearer paper -- payable to anyone in
        possession of the paper
                                                   23
        Business Law and the Legal Environment
8
    Interpretation of Ambiguities
     When terms contradict, three rules
       apply:
        • Words take precedence over numbers.
        • Handwritten terms prevail over typewritten
          terms.
        • Typed terms prevail over printed terms.



                                                       23
      Business Law and the Legal Environment
9
                   Negotiation
      Negotiation means that an instrument
        has been transferred to the holder by
        someone other than the issuer.
         • To be negotiated, order paper must first be
           indorsed and then delivered to the
           transferee.
         • Bearer paper must simply be delivered to
           the transferee; no indorsement is required.
                                                         23
       Business Law and the Legal Environment
10
                  Indorsement
      An indorsement is the signature of the
        payee.
         • Blank Indorsement -- does not designate a
           new payee; becomes bearer paper.
         • Special Indorsement -- does designate a
           new payee; only that person may cash the
           check.
         • Restrictive Indorsement -- limits the check
           to one particular use (such as deposit into a
           particular account).
                                                           23
       Business Law and the Legal Environment
11
           Holder in Due Course
      A holder in due course has an
         automatic right to receive payment for a
         negotiable instrument (unless issuer
         can claim one of a few “real” defenses).
      Requirements for Holder in Due Course
       • Under §3-302 of the UCC, a holder in due
         course is a holder who have given value for
         the instrument, in good faith, without notice
         of outstanding claims or other defects.         23
        Business Law and the Legal Environment
12
         Notice of Outstanding
        Claims or Other Defects
      The instrument is overdue
      The instrument is dishonored
      The instrument is altered, forged, or
       incomplete
      The holder has notice of certain claims
       or disputes
                                                 23
       Business Law and the Legal Environment
13
                 Shelter Rule
      Under the shelter rule, the transferor of
       an instrument passes on all of his
       rights.
      When a holder in due course transfers
       an instrument, the recipient acquires all
       the same rights even if she is made a
       holder in due course herself.

                                                   23
       Business Law and the Legal Environment
14
                   Defenses
  Real and personal defenses are valid
   against an ordinary holder; only real
   defenses can be used against a holder in
   due course.
  Real Defenses
     • Forgery, Bankruptcy, Minority, Alteration Duress,
       Mental Incapacity, Illegality, and Fraud in the
       Execution
  Personal Defenses
     • Breach of Contract, Lack of Consideration, Prior
       Payment, Unauthorized Completion, Fraud in the
       Inducement and Non-Delivery
                                                           23
     Business Law and the Legal Environment
15
          Claims in Recoupment
      A Claim in Recoupment is not the same
       as a defense, but it has similar impact.
      Claim in Recoupment is a refusal to pay
       the full amount of the instrument because
       the payee owes the issuer another debt.
       Issuer subtracts the prior debt from the
       payoff of the current instrument.
      In contrast, a defense is a refusal to pay
       the instrument due to some problem with
       the instrument or the underlying
       agreement.
                                                    23
        Business Law and the Legal Environment
16
           Consumer Exception
      A consumer credit contract is one in
       which the seller is also the lender.
      In such cases, the Federal Trade
       Commission requires a specifically-
       worded notice to be included on the
       contract, making it non-negotiable.



                                                 23
        Business Law and the Legal Environment
17
       “Commercial paper is a fact of
        life for most people today; it is
         used extensively in business
          and consumer transactions.
            But, whenever someone
       acquires a document, he ought
          to quickly ask himself, „How
       certain am I to be paid the face
            value of this document?‟”
                                              23
     Business Law and the Legal Environment
18
                Link to the Internet                                Click
        Clicking on the orange button below will link              above to
                                                                    return to
         you to the website for this book. (You must first
                                                                    the slide
         have an active link to the internet on this computer.)     show.
        Once there, click:
          •   Online Study Guide, then
          •   Your choice of a chapter, then
          •   Practice, then
          •   Internet Applications
        You should then see web links                Click here!
         related to that chapter.                                   23
         Business Law and the Legal Environment
19

				
DOCUMENT INFO
Shared By:
Categories:
Stats:
views:884
posted:1/25/2011
language:English
pages:19
Description: Draft of Legal Notice for Breach of Contract document sample