Negotiable Instruments (LAW-616-001)
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Negotiable Instruments- Professor Effross
Fall 2020 616-001 Tuesday/Thursday, 9:00 – 10:20 a.m.
On its most basic level, this course examines and applies the rules—featured on some states’ bar examinations-- that govern the system of negotiable instruments, which are often used to pay for goods or services pursuant to contracts.
We will focus primarily on the processes by which a party’s hard-copy or digital personal promise (note), or order to another (draft) to pay money can be acquired– by gift, barter, purchase, fraud, theft, or windfall– by subsequent parties in turn, and on the respective rights and liabilities of the various parties in such situations. Almost immediately, for instance, we will address extremely practical concerns– a number of which are unfamiliar even to many practitioners– 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 use of negotiable instruments by corporations; 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 derive satisfaction from mastering their interpretation, interlocking, interdependence, and interaction.
As in chess, in the law of negotiable instruments: (1) complex situations can easily emerge from a limited number of elements and rules; (2) there exist operational strategies to evaluate, analyze, and resolve even the most complicated of these situations; and (3) problem-solving practice enables students to acquire and develop the skill of identifying and applying such strategies. We will treat the judicial opinions in the casebook simply as entry points to the practical consideration of a wide variety of true-life situations.
Negotiable instruments can be seen as the “third dimension” of commercial arrangements (for instance, many lending situations and real estate sales) that also involve both Sales (Article 2 of the Uniform Commercial Code) and Secured Transactions (Article 9). However, neither of those courses is a pre- or co-requisite to Negotiable Instruments.
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, through the more recent innovations of debit cards and stored-value cards, and into today’s most celebrated financial technology, blockchain (and its specific applications, Bitcoin and other cryptocurrencies).
The examination for the course will be 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.
Class audits are charged the same amount of tuition as classes taken for credit. Auditing students do not receive credit for the course toward graduation requirements, but it will appear on their transcript with a grade of “L” to indicate auditing. To request permission to audit a course, please contact the Office of the Registrar at firstname.lastname@example.org.
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 coursebook is:
Chomsky et al., eds., Selected Commercial Statutes 2020 (West) ISBN # 9781684679645
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.
The casebook, Nickles, Matheson & Adams, Modern Commercial Paper (West) ISBN # 9780314032409 will be available in pdf format through the MyWCL page for the course.
First Class Readings
Not available at this time.