Term
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Definition
drafts, promissory notes, checks, and certificates of deposit that, in proper form, give special rights as “negotiable commercial paper”
-Treated kind of like a contract
-Governed by article 3 of the UCC
-Title/ ownership is transferred by negotiation |
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Term
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Definition
| writer, transferable, signed promise or order to pay a specified sum of money; a negotiable instrument |
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Term
| Elements of Negotiable Instruments |
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Definition
1. Payable to bearer or order
2. Payable on demand or at a specific time
3. No other purpose than payment of the money |
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Term
| Types of Negotiable Instruments |
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Definition
1. Check
2. CD (certificate of deposit)- written promise to pay specified amount of money by a bank
3. PN (Promissory note)- written promise to pay a specified amount of money, has to be signed by maker to holder (maker is person that makes the promise)
4. Drafts (also known as bill of exchange)- has a drawer (giving the order to pay), drawee (whom the order is to), and a payee (person getting paid, receiving money)
*Drafts are unconditional while checks have conditions put on them |
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Term
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Definition
| person who signs an instrument to lend credit to another party to the paper |
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Term
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Definition
quality of an instrument that affords special rights and standing
-Distinguishes commercial instruments from ordinary contracts |
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Term
| Requirement of Negotiability |
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Definition
Requirement of negotiability
1. Record (writing), no form required
2. Signed/ authenticated→ by drawer/ maker (could be an agent) |
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Term
| Promissory Note Requirements |
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Definition
Promissory Note Requirements
1. Promise/ order to pay
2. Unconditional
3. Payment in money form
4. Exact amount of money
5. Payable on demand (at site or presentation of the note) or at specified time
6. Magic words- pay to order or bearer (on front of paper) |
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Term
| Order Paper vs. Bearer Paper |
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Definition
-order paper- “pay to the order”; requires indorsement and transfer of possession
-bearer paper- “pay to bearer”; transferred/ negotiated by delivery (must have actual/ constructive possession) |
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Term
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Definition
| Possession of instrument (runs to them) |
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Term
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Definition
| A holder who has given value, taken good faith without notice of dishonor, defenses, or that instrument is overdue, and who is afforded special rights or status. |
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Term
| Elements to be a holder in due course |
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Definition
1) Holder
2) Give value
3) Good faith- act honestly; act reasonably in regards to commercial dealings |
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Term
| Close connection doctrine |
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Definition
circumstantial evidence, such as an ongoing or a close relationship, that can serve as notice of a problem with an instrument
-Guilt by association |
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Term
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Definition
a doctrine in the common law of property under which a grantee who has received an interest in property from a bona fide purchaser will also be protected as a bona fide purchaser, even if the grantee would not legally qualify for this status.
*Bona fide- sincerely; without intention to deceive. |
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Term
| What holders in due course are not subject to (protected against) |
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Definition
-Ordinary contract defenses
-Incapacity of Maker or Drawer
-Fraud in the inducement- fraud that occurs when a person is persuaded or induced to execute an instrument because of fraudulent statements
-Miscellaneous defenses
>Prior payment or cancellation of the instrument
>Non-delivery
>Conditional or special-purpose delivery
>Breach of warranty
>Duress consisting of threats
>Unauthorized completion
>Theft of a bearer instrument |
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Term
| What all holders can be liable for (Universal defenses against all holders) |
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Definition
1) Fraud as to the Nature or Essential Terms of the Instrument
2) Forgery or Lack of Authority
3) Duress Depriving Control
4) Incapacity
5) Illegality
6) Alteration- unauthorized change or completion of a negotiable instrument designed to modify the obligation of a party to the instrument |
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Term
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Definition
| Formal request for payment on an instrument by a holder/ holder in due course (in writing or by electronic means) |
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Term
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Definition
primary party refuses to pay
-Only once this occurs can you go after secondary party (cosigner)
-Banks give notice of dishonor at midnight of next day; non-banks have 30 days (insufficient funds, NSF checks) |
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Term
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Definition
| a check whose date is longer than six months ago |
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Term
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Definition
| primarily liable for the debt or obligation of the principal debtor |
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Term
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Definition
signature of the payee on an instrument
*Banks are able to indorse for their customers
Multiple payees- “and”, “or” |
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Term
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Definition
| does not designate anybody |
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Term
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Definition
| an indorsement that specifies the person to whom the instrument is indorsed |
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Term
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Definition
| an indorsement that includes words such as “without recourse” that disclaims certain liability of the indorser to a maker or a drawee |
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Term
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Definition
| an indorsement that restricts further transfer, such as in trust for or to the use of some other person, is conditional, or for collection or deposit |
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Term
| Unauthorized indorsements |
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Definition
-Not valid
-Not properly indorsed |
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Term
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Definition
1. Impersonating a payee- pretending to be payee, but they are not really
2. Dummy payee- example: money embezzlement
3. Dummy payee supplied by dummy employer |
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Term
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Definition
| a contract by someone in exchange for consideration so that you will pay another person in the event that they experience a loss (Ex. Insurance) |
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Term
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Definition
| the party who is secondary liable may stand in place of a creditor after making payment to the creditor and therefore enforce the creditors rights against the party who is primarily liable |
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Term
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Definition
aim to protect the rights of consumers
*all 50 states including the District of Columbia have Consumer Protection Laws |
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Term
| FTC (Federal Trade Commission) |
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Definition
prohibits unfair or deceptive trade practices
-can go after anyone who has a transaction with the consumer
-deems them for failing to act as well
-consumer does not have to be damaged to go after someone
-do not protect consumers from their own negligence |
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Term
| CFPB (Consumer Financial Protection Bureau) |
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Definition
| consumer protection bureau located within the Federal Reserve that now has jurisdiction over all consumer credit issues and statutes |
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Term
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Definition
| sum of money that will compensate an injured plaintiff for actual loss |
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Term
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Definition
| damages, in excess of those required to compensate the plaintiff for the wrong done that are imposed to punish the defendant because of the particularly wanton or willful character of wrongdoing; also called exemplary damages |
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Term
| Areas of Consumer Protection |
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Definition
1. Deceptive ads- false or misleading (liberally defined)
-Essential element: deception
2. Labeling- accurate information about the product
-Warnings
3. Selling methods
-Home sales greater than $25
>3 days to rescind contract
4. Telemarketing fraud- doesn’t apply to political and charity
-TCPA (telephone consumer protection act of 1991)
-Have to call between 8AM to 9PM
-Can’t call healthcare services
-Prohibits unsolicited faxes
5. Form
6. Subprime mortgages/ lending- lending to consumers who have filed bankruptcy, have no credit history, bad credit, and low income
-Limits on interest rates
-10 days to rescind
-Contract disclosure requirements
-Credit counseling
-Can’t do it for college students on campus
7. Unconscionability
-Price gouging
8. TILA
-Over 4 installments (“3 easy payments of …”)
9. Unsolicited credit card sales
-Regulated locations (college campuses)
-Mail |
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Term
| Elements of Credit Card Fraud |
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Definition
-Unauthorized use up to $50
1. Accepted card
2. Notice
3. Notice- how to report lost/ stolen
4. Method to ID authorize user
5. Lost/ stolen
CC Co must show |
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Term
| 3 Main Credit Reporting Agencies |
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Definition
1. Equifax
2. Experian
3. Transunion
-tell consumer anyone who pulled report in last 6 months
-tell consumer employers who pulled report in last 2 years
-hearsay evidence→generally not admissible
-bankruptcy on report for 10 years |
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Term
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Definition
a loan or credit transaction in which the lender acquires a security interest in collateral owned by the borrower and the creditor is therefore entitled to special protection
-perfect your interest (sometimes automatic)
-rank priority |
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Term
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Definition
-covered by federal law
Chap. 7- use means test→have to fall below states median disposable income or dismissed for abuse
-can be individuals, partnerships, corporations
Chap. 13- consumer repayment plan; debts partially repaid (can convert to chap. 7)
Chap. 11- businesses
Chap. 12- farmers, insurance companies, savings and loan, cities, railroads, certain businesses |
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Term
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Definition
1. voluntary (debtor) or involuntary (creditor) bankruptcy petition filed
2. debtor files schedule of assets/ income and debts/ expenses
3. debtor provides list of creditors
4. trustee appointed
5. credit counseling within 180 days of filing
6. proofs of claims filed by creditors→ranked by priority
7. order for relief; discharge, plan, or dismissal |
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Term
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Definition
| order of the bankruptcy court relieving the debtor from obligation to pay the unpaid balance of most claims |
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Term
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Definition
| Educational loans, taxes within three years of filing bankruptcy, liability for obtaining money by false pretenses, government fines or penalties imposed within three years prior |
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Term
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Definition
| relationship that exists between a person identified as a principal and another by virtue of which the latter may make contracts with third persons on behalf of the principal (Parties- principal, agent, third person) |
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Term
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Definition
person or firm who is authorized by the principal or by operation of law to make contracts with third persons on behalf of the principal
-employees are agents of their employer |
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Term
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Definition
person or firm who employs an agent; person who, with respect to a surety, is primarily liable to the third person or creditor; property held in trust
-store owner employs manager |
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Term
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Definition
| contractor who undertakes to perform a specified task according to the terms of a contract but over whom the other contracting party has no control except as provided for by the contract |
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Term
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Definition
| agent authorized to transact a specific transaction or to do a specific act |
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Term
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Definition
| agent authorized by the principal to transact all affairs in connection with a particular type of business or trade or to transact all business at a certain place |
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Term
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Definition
| agent authorized by the principal to do all acts that can lawfully be delegated to a representative |
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Term
| Interest in the authority |
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Definition
| form of agency in which an agent has been given or paid for the right to exercise authority |
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Term
| Interest in the subject matter |
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Definition
| form of agency in which an agent is given an interest in the property with which that agent is dealing |
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Term
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Definition
| authority of an agent that is reasonably necessary to execute express authority |
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Term
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Definition
| appearance of authority created by the principal’s words or conduct |
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Term
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Definition
| authority of an agent to do any act that, according to the custom of the community, usually accompanies the transaction for which the agent is authorized to act |
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Term
| How agency relationships are created |
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Definition
1. Expressly authorizing
-buying or selling land, has to be in writing
2. Conduct/ implied
-store working asking to assist is implied
3. Ratification
1) the agent must have purported to act on behalf of or as agent for the identified principal
2) the principal must have been capable of authorizing the act both at the time of the act and at the time it was ratified
3) the principal must have full knowledge of all material facts
4. By law |
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Term
| Agent is never liable if: |
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Definition
1. Disclosed principal
2. Must be working within proper authority
3. Contract executed properly
4. Federal employee involved in a tort
-Typically looking for the first 3 |
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Term
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Definition
1. Partially undisclosed principal (no way to ID)
2. Undisclosed principal (Unknown)
3. Fraud, negligence |
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Term
| Duties of agent to principal |
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Definition
1. Loyalty- negotiating to get benefit for only principal, especially not yourself
2. Obedience and performance- agent must follow directions given by principal
3. Reasonable care
4. Accounting- account for all property or money belonging to the principal that comes into the agent’s possession
5. Information- keep principal informed of all facts relating to the agency |
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Term
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Definition
1. Contractual duties- can’t go out and get someone else to do the same job or do job themself after an agreement
2. Compensation- Principal must pay the agent the agreed compensation |
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Term
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Definition
-Contract has specified time
-Termination by Act of Parties
-Termination by Operation of Law
1. Insanity of the principal or agent
2. Bankruptcy of the principal or agent
3. Impossibility of performance, such as the destruction of the subject matter
4. When the country of the principal is at war with that of the agent |
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Term
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Definition
| somebody is being held responsible for the actions of another |
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Term
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Definition
holding an employer liable for the action of their employee
-Doctrine that the principal or employer is vicariously liable for the unauthorized torts committed by an agent or employee while acting within the scope of the agency or the course of the employment, respectively
-Principal is not liable for an intentional act |
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Term
| Terms found in collective bargaining agreements: |
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Definition
1. Identification of the work belonging exclusively to designated classes of employees
2. Wage and benefits clause
3. Promotion and layoff clauses
4. A management’s rights clause
5. A grievance procedure |
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Term
| Employment-at-will doctrine |
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Definition
| doctrine in which the employer has historically been allowed to terminate the employment contract at any time for any reason or for no reason |
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Term
| Employers can fire employees for: |
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Definition
-Disloyalty
-Fraud
-Theft
-Lack of performance
-Incompetent
-Suffering financial hardship |
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Term
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Definition
-Business has to have a specific number of employees before they have to be responsible for workers compensation
-Liable for worker getting injured on the job
-Not liable if employee is injured from own contributory negligence
-Claims are filed and brought before a special administrative agency |
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Term
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Definition
wage laws
-Subminimum wage provisions
-Wage issues
-Overtime pay
-Child labor provisions |
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Term
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Definition
| 12 weeks off, unpaid; employer can force to take away from vacation days; has to be a medical condition that prevents employee from doing job |
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Term
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Definition
| -To make sure people still have source of income once they retire |
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Term
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Definition
Medicaid- Under a certain income
Medicare- Over a certain age |
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Term
| Occupational Safety and Health Act |
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Definition
| preserve the US workforce |
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Term
| Employee related immigration laws |
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Definition
-Employers must check employee eligibility to work in the US
-I-9 form; employers us “everify” to verify eligibility |
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Term
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Definition
-Employer can monitor phone calls at work, but once employer realizes it is a personal call, they must cease listening
-If employee handbook says that personal emails are prohibited, they may monitor emails
-Property searches: protected by the fourth amendment, public-sector employees have a reasonable expectation of privacy with respect to their desks and file cabinets; Value of search will outweigh the privacy of employee |
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