Business Law Chapter 27 Homework Article But The Result Would Likely The

subject Type Homework Help
subject Pages 5
subject Words 2712
subject Authors Frank B. Cross, Kenneth W. Clarkson, Roger LeRoy Miller

Unlock document.

This document is partially blurred.
Unlock all pages and 1 million more documents.
Get Access
page-pf1
ALTERNATE CASE PROBLEM ANSWERS
CHAPTER 27
LIABILITY, DEFENSES, AND DISCHARGE
27-1A. Discharge
The jury returned a verdict for Mary Ann, and the court issued a judgment that, in part,
discharged the note. The Gardners appealed, arguing that Mary Ann’s finding the note in a file
in the basement was not enough to prove they surrendered the note because Mary Ann did not
27-2A. Unauthorized indorsements
(This case was decided under the unrevised Article 3, but the result would likely by the same
under the revised Article 3.) Ordinarily, First City would be liable to the payor bank (First
National) because First City had accepted the checks in spite of the fact that their indorsements
page-pf2
B-2 APPENDIX B: ALTERNATE CASE PROBLEM ANSWERSCHAPTER 27
27-3A. Unauthorized indorsements
This case was decided under the unrevised UCC 3405. Under that section, the law firm had to
bear the loss. The court emphasized that when an indorsement is forged, “generally the bank
that first paid on the check will bear the loss.” But it also pointed out that UCC 3405(1)(c)
provided an exception to this rule. “This section places the loss on the drawer when an
employee supplies him with the name of the payee intending that the named payee have no
interest in the check and an indorsement is forged in the name of the named payee.” The court
27-4A. Unauthorized indorsements
The court concluded that the imposter rule did not apply. Wanda Snow was not the drawer of
the check but a payee suing the collecting bank for acceptance of the check bearing her forged
indorsement. The court stated that “where the payee of a check is suing a collecting bank, there
is no policy reason for shifting the risk of loss to the payee, since as between [Snow] and
Southeast, the bank was in a superior position to prevent the fraud from occurring.” The court
page-pf3
APPENDIX B: ALTERNATE CASE PROBLEM ANSWERSCHAPTER 27 B-3
27-5A. Unauthorized indorsements
The trial court denied the banks’ motion for summary judgment, and the banks appealed. The
appellate court reversed the lower court’s ruling. Summary judgment for the banks was
appropriate because the unauthorized indorsements fell under the fictitious payee rule of UCC
3405 and hence the banks were not liable. The court noted that the principle underlying the
27-6A. Defenses
In this classic case concerning the defense of fraud in the execution, the Kansas court en-
tertained three possible views. One was that since Ort never intended to execute a note, he
should not be held liable for the act. A second view is that the jury should decide, as a question
27-7A. Illegality
The trial court held for the plaintiff, and Berenyi appealed. The appellate court affirmed the trial
court’s judgment. In addressing the question of Berenyi’s liability on the note, the court stated
page-pf4
B-4 APPENDIX B: ALTERNATE CASE PROBLEM ANSWERSCHAPTER 27
27-8A. Defenses
The court held that nondelivery was a proper defense against Vesely because Vesely was not a
holder in due course. To be a holder in due course the holder must take the instrument without
27-9A. Discharge
“Intent” was the principal factor in the eyes of the court. The Supreme Court of Nebraska held
that the unintentional cancellation and surrender of a promissory note through a clerical error
27-10A. A QUESTION OF ETHICS
1. In determining whether the bank had been negligent because it had not contacted
Parker before disbursing the loan proceeds to Kirkman, it is important to realize that the note
was complete when presented to the bank, and there were no obvious alterations on it. Also, it
is significant that the bank loan officer had known Kirkman for a number of years and knew that
page-pf5
APPENDIX B: ALTERNATE CASE PROBLEM ANSWERSCHAPTER 27 B-5
2. As mentioned before in this text, an underlying goal of the UCCand of the law
generallyis to protect innocent parties from harm. Generally, if one of two innocent parties to
a transaction must be forced to bear a loss, the UCC, in the interests of fairness, will hold that
3. If you decided that Parker should be liable for the loss, you could justify your
conclusion by referring to the UCC’s policy discussed abovethat the party in the best position
to prevent the loss should bear the loss. Obviously, Parker, by signing an incomplete
instrument, opened himself to liability under the UCC. On the other hand, if you decided that the

Trusted by Thousands of
Students

Here are what students say about us.

Copyright ©2022 All rights reserved. | CoursePaper is not sponsored or endorsed by any college or university.