1-1-16 An Introduction to Commercial Law Frederick M. Hart University of New Mexico - Main Campus William F. Willier Follow this and additional works at: http://digitalrepository.unm.edu/law_facultyscholarship Recommended Citation Frederick M. Hart & William F. Willier, An Introduction to Commercial Law, Draft (16). Available at: http://digitalrepository.unm.edu/law_facultyscholarship/73 This Working Paper is brought to you for free and open access by the School of Law at UNM Digital Repository. It has been accepted for inclusion in Faculty Scholarship by an authorized administrator of UNM Digital Repository. For more information, please contact disc@unm.edu.
An Introduction to Commercial Law by W i I I i am F. W i I I i er Professor of Law, Boston College Law School and Frederick M. Hart Visiting Professor of Law, University of New Mexico Law School These materials are a first draft of a projected short text on this subject and are meant for private distribution only. Al I rights are reserved. Copyright, 16
i. Preface These materials are designed as a short introductory text on Commercial Law. Difficult problems are intentionally avoided, as are references to cases and legal periodicals. The bib I iography contains a selection of texts that explore the Code more thoroughly and offer an avenue into the case law that is quickly developing under the Uniform Commercial Code. This introductory text should be useful to the student who is approaching Commercial Law for the first time and as a quick reference (or quick review) for those who have had experience with the subject. This text is used by the authors to complement a problem approach used in the teaching of Commercial Law. These materials draw freely upon what the authors have written in Forms and Procedures Under the Uniform Commercial Code, and in some instances upon material in The Uniform Commercial Code Reporter-Digest.
ii TABLE OF CONTENTS Pref ace............................ PART 1 Introduction A. Scope of Commercial Law..... B. Interpreting th~ Uniform Commercial Code C. Uniform Commercial Code Bibi iography 1 1 5 PART 2 Sales I. INTRODUCTION.............. A. Genera 11 y..... B. Firm Offers.......... c. Uni latera I and Bi I atera I Offers 11. CONTRACT FORMATION AND ENFORCEABILITY. D. Medium of Acceptance..... E. Acceptance by Shipment of Non-Conforming Goods F. Acceptances that Vary Terms of Offer--Counteroffers. G. Effect of the Seal............ H. Unconscionable Contracts and Clauses I. Open Terms-Agreement to Agree... J. Statute of Frauds......... K. Paro I Evidence Rule--lnterpretation of Contracts L. Modification of Contracts for Sale I 11. SELLER'S OBLIGATIONS.............. A. Obi igations of Seller in General B. De I i very Ob I i gat ion..... c. Seller's Warranty Obi igations. IV. BUYER'S OBLIGATIONS... A. In General............. B. Code Provisions in General c. Inspection - Acceptance - Time of Payment. v. INSTALLMENT CONTRACTS......... A. lnstal lment Contracts in General B. Payment..................... c. Breach of One lnstal lment: Effect on that I nsta I lment D. Breach of One I nsta I I ment as a Total Breach VI. RI SK OF LOSS... VII. RIGHTS AND REMEDIES.... A. In General....... B. lmpossibi I ity of Performance.... 8 8 8 10 13 13 15 15 16 17 18 18 18 27 33 33 33 35 40 40 41 41 41 42 42 42 44
iii c. o. E. Prospective lnabl lity to Perform--Anticipatory Repudiation.. Seller's Remedies. Buyer's Remedies... 45 47 55 PART 3 Commercial Paper I. I I II I IV. v. IMPORTANCE OF "NEGOTIABILITY" - REQUISITES OF NEGOTIABILITY A. General..... B. Requirements of a Negotiable Instrument.... IMPORTANCE OF THE TRANSFER OF A NEGOTIABLE INSTRUMENT A. Assignment Distinguished from Negotiation. 8. Special and Blank lndorsements.... C. Negotiation Distinguished from Presentment D. Negotiation Distinguished from Issuance. HOLDER IN DUE COURSE.. A. Generally. B. Holder.. C. Va I ue... 0. Good Faith E. Notice of Overdueness, Defenses and Claims... RIGHTS OF A HOLDER IN DUE COURSE--REAL AND PERSONAL DEFENSES.... A. Adverse Claims...... B. Defenses.............. LIABILITY OF PERSON TRANSFERRING A NEGOTIABLE INSTRUMENT A. Contract of lndorsement - Qua I ified lndorsements B. Presentment, Dishonor and Notice of Dishonor C. Warranties of Transferor..... D. Guarantors............. E. Restrictive and Conditional lndorsements 60 60 62 68 68 6 70 70 71 71 71 73 74 75 7 7 7 80 80 80 82 83 83 I. II. 111. PART 4 Secured Transactions NATURE OF SECURED TRANSACTIONS.... EFFECTUATING A SECURITY INTEREST A. The "Security Agreement".... B. When There is a Security Interest: Attachment TYPES OF COLLATERAL......... A. Nature of Col lateral in General B. Goods in General c. Consumer Goods o. Inventory............ 86 87 87 88 8 8 8 0 0
iv IV. v. VI. VII. VI I I IX. E. Farm Products.... F. Equipment.... G. Fixtures and Accessions H. Tangible Intangibles in General I. Instruments... J. Documents of Title K. Chattel Paper... L. I ntang i b I es in Genera I M. Contract Rights... N. Accounts.... O. General Intangibles P. Proceeds... PURCHASE MONEY SECURITY INTEREST CHARACTERIZING THE STATUS OF CONTESTING THIRD PERSONS A. In General.... B. C. Lien Creditors Other Secured Parties D. Transferees.. E. Buyer in Ordinary Course of Business F. G. Bu I k Transferees....... Holders in Due Course of Negotiable Instruments and "Bona Fide Purchasers" of Securities.. H. I. Holders of Duly Negotiated Documents of Title. Purchasers of Non-Negotiable Instruments and Chattel Paper................ J. Buyers of Consumer Goods and Farm Equipment. K. Other Transferees. L. Trustee in Bankruptcy......... M. Other Third Persons......... REMEDIES OF THE SECURED PARTY UPON DEBTOR'S DEFAULT. A. In Genera I............... B. Secured Party's Rights Upon Default--ln General C. Secured Party's Right to Keep Col lateral in Satisfaction of Obi igation...... D. Sale of the Col lateral by the Secured Party. PERFECTION...... A. General....... B. Methods of Perfection.. C. Perfection by Possession D. Perfection by Fi I ing E. Automatic Perfection F. Grace Periods. Fl LING.... A. Where to Fi le B. What to Fi le RIGHTS OF SECURED PARTY AGAINST THIRD PARTIES A. In Genera I... B. Status of General Creditors..... 0 2 2 2 4 5 5 ~ ~ 100 r 1()0 1 ~1 104 104 106 106 106
C. First in Time--First in Right Rule..... 107 D. Special Rules as to Purchase Money Security Interests 107 E. Special Rules as to Buyers in Ordinary Course.. 108 F. Protection Given Consumer Buyers... 108 v.