Fall 2017 Course Schedule

Negotiable Instruments (LAW-616-001)
Walter Effross

Meets: 01:30 PM - 02:50 PM (TTh) - Warren - Room N101

Enrolled: 3 / Limit: 40

Administrator Access


Assessment: Exam, in-class, open book and in the form of essay questions


On its most basic level, this course analyzes and applies the rules governing the “payment systems” of negotiable instruments, funds transfers, and credit cards.

We will focus primarily on the processes by which a party’s paper or electronic promise (note) or order (draft) to pay money can be acquired– by gift, barter, purchase, fraud, theft, or windfall– by subsequent parties in turn, and what the respective rights and liabilities of the various parties are in such situations. Almost immediately, for instance, we will be discussing extremely practical concerns– a number of which are unfamiliar even to many lawyers– about drafting, indorsing, and depositing checks.
Practical themes of the course include: the identifying characteristics of notes and drafts; maximizing one’s ability to collect on a negotiable instrument; minimizing one’s own liability on the instrument (particularly in situations involving fraud); the Uniform Commercial Code’s non-colloquial definitions of such terms as “signature” and “forgery,” and Article 3’s specialized definitions of such terms as “conversion”; the role of banks in honoring and dishonoring checks; and the ways in which the Code treats negotiable instruments both as contracts and as pieces of personal property.

We will work extensively with many different sections of Articles 3 and 4 of the Uniform Commercial Code. This brightly-lit legal landscape, marked by centuries-old pathways of practice, contains few places for the shadows of ambiguity to lurk. Many students find a refreshing precision and logic in the provisions of the Code, and a sense of satisfaction in mastering their interpretation, interlocking, interdependence, and interaction.

As in chess, in the law of negotiable instruments complex situations can easily emerge from a limited number of elements and rules; there exist operational strategies to evaluate, analyze, and resolve even the most complicated of these situations; and the student must actively engage in problem-solving practice to acquire and develop the skill of identifying and applying such strategies. We will treat the judicial opinions in the casebook as simply entry points to the practical consideration of a wide variety of true-life situations.

Finally, this course examines the ways in which commercial practices and the Code have evolved in response to the transformation from purely paper-based payment methods to credit card payments and electronic funds transfers, and to the more recent systems of debit cards and stored-value cards.

The examination for the course will be in-class and open-book (restricted to materials assigned for the course), and in essay format. In our final class session of the semester we will review in detail approaches and answers to the most recent examination.

This course does not require any previous knowledge of, or experience with, business or business law. The Sales and Secured Transactions courses, which address other Articles of the Uniform Commercial Code, are *not* prerequisites of Negotiable Instruments.

Textbooks and Other Materials

The textbook information on this page was provided by the instructor. Students should use this information when considering purchases from the AU Campus Store or other vendors. Students may check to determine if books are currently available for purchase online.

The required books are:

Nickles, Matheson & Adams, Modern Commercial Paper ISBN # 978-0314-032-409

Brook, Payment Systems: Examples and Explanations, 5th ed. (2013)
ISBN # 978-1-4548-1767-3

Chomsky et al., eds., Selected Commercial Statutes 2017
ISBN # 9781683287551 (available during the summer)

Several copies of each of these books will be on reserve in the Pence Law Library.

It is possible to use a statutory supplement from a recent year instead of the current Chomsky supplement, but there is no guarantee that all of the material will be exactly the same.

Because the University Bookstore has not always reliably obtained required books on time, you might consider other (including online) options.

First Class Readings

Not available at this time.


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