Negotiable
Instruments Class
Spring 2002
Professor Jaryn Barker
I wish each of
you good luck on the Final Examination. This is an open book exam. You may
refer to any written materials you wish.
You will have
two hours to complete your answers.
You should have
eight pages of questions. Please do not write on the sheets of questions;
all answers are to appear in the blue books.
There are two
parts, each valuing 50%, to this exam. Part I is objective and consists of
twenty questions that are short answer, fill-in-the-blank, multiple choice
and true false. Some of the questions may have subparts. Part 11 is essay
and consists of two fact scenarios (Part II A and Part 11 B), and then some
questions asking you to provide legal advice to respond to very specific
questions. My recommendation is that you will need more than one hour to
complete Part B.
Please put your
exam number on each blue book and on the exam questions.
Turn in all questions,
scratch paper, blue books after the conclusion of the exam
GOOD LUCK.
Professor Jaryn
Barker
PART II
PART 2A
Once upon a time there
was a twenty-one year old princess, ("Prissy"), who was of sound mind, although
a bit absent-minded. Prissy accidentally got herself locked in the tallest
tower of her castle. Prissy called "Knights R Us" ("KRU") who sent over a
travelling knight ("Rusty") to perform the required rescue.
Rusty told Prissy he
would not unlock the tower unless she paid him first. Prissy had forgotten
to reorder her checks at Bank of Kingdom ("BofK"). Because Prissy was desperate,
and creative, she grabbed the bottom several inches of her very long dress,
and ripped it off. It was a rectangular piece of fabric, approximately two
inches wide, by six inches long. She, used a felt-tip pen, and wrote the
date and the following words on the piece of material:
"Pay to the order
of Knights R Us, 100 pieces of silver." Below that, she wrote: "Drawn on my
account number 123-456 at Bank of Kingdom," and placed a mark, which was
a little crown. The scrap looks like this:
Rusty took the fabric
scrap, unlocked the tower for Prissy, and rode away to the Bank of Kingdom.
Rusty has an account at BofK. So does his employer, KRU, on whose account
he is an authorized signer.
Rusty scribbles on
the back of the scrap, " Knights R Us, by Rusty Knight" and presents the
scrap for deposit.
You are the legal representative who gets the call from the teller at BofK.
The banking center of the BofK is in a land where the Unicorn Commercial
Code has been adopted. The Unicorn Commercial Code (UCC) is identical to
the Uniform Commercial Code adopted many years later, in 2002, in California,
USA. The teller wants to know the answers to the following questions:
1. What is the piece
of fabric? Is it a valid instrument? Analyze how
you came to your conclusion.
2. Does it matter
that Prissy drew a little crown where a signature is
usually placed? (Prissy
has always drawn a little crown on her checks
where the maker's
signature belongs. She has been doing this for the last
5 years, and it has
never been a problem.)
3. Should the teller
allow Rusty to deposit the scrap to the account of
KRU?
4. Should the teller
"cash" the scrap for Rusty if Rusty requests the
teller to do so? Might
there be a problem later if the teller does so?
5. MUST the teller
refuse to accept the scrap for deposit because the
teller knows there
is a statement in the deposit account agreement between
BofK and Prissy that
states: "WHEN YOU WRITE CHECKS ON YOUR
ACCOUNT, YOU SHOULD
USE CHECKS THAT WE PROVIDE. IF YOU
CREATE OR SOMEONE ELSE
PROVIDES YOUR CHECKS, THE CHECKS
MUST MEET OUR CHECK
PRINTING SPECIFICATIONS, INCLUDING
SPECIFICATIONS REGARDING
YOUR ACCOUNT INFORMATION. IF YOU
USE CHECKS THAT DON'T
MEET OUR SPECIFICATIONS, WE MAY
REFUSE TO ACCEPT THEM."
PART 2A
Rusty Knight decides
that Prissy will never miss funds from her accounts (all of which are at
BofK), and he wants a new set of armor, a new horse and a vacation from which
he does not plan to return. Rusty calls a merchant several kingdoms away
and orders a new set of armor from Chain Mail by Mail ("CMM"), which specializes
in sending discount armor by mail order. Rusty uses Prissy's MasterKingdom
Card number that he had spied while at her castle, and gets a custom suit
of armor on January 4, 1002 (two days after he had visited the castle).
On February 18, 1002, Rusty calls Horse A Round ("HAR") and orders a horse
to be delivered to his friend's home, where he picks it up and rides off
on his "vacation." HAR creates an item that looks like a check drawn on Prissy's
account (since all the information was given to them by Rusty, who identified
this account as his own), deposits it into HAR's account at All Queen's Bank
("AQB") on March 9, 1002, and it is included in Prissy's statement sent to
her on March 15, 1002. The item looks like this:
On March 15, 1002, April 15,
May 15 and June 15, and every month thereafter, Rusty (through telephonic
transactions with various merchants) continues to have items drawn on Prissy's
account at BofK used for goods or services he buys for himself.
On February 15, 1003,
Prissy decides to open all of her bills, including her MasterKingdom Card
statement, (which are automatically debited from her checking account) and
her bank statements which have been sitting in an untidy pile. She finds
the charge from CMM on her credit card and the remainder of transactions
on her BofK checking account and immediately (!!!) files a claim with BofK.
You are the legal
representative who gets the call from the banker at BofK.
1. (a) What claims
can Prissy raise due to the charges on her credit
card? Assume the suit of armor was 750 pieces of silver =
$US 750.00. Assume
the law of the land is the same law that
exists in California
in the year 2002.
(b) How much (if any) should Prissy be liable for? Why?
(c) Would your answer
be the same if Prissy opened her
MasterKingdom Card mail on March 1, 1002, and discovered
the charge then? Why?
2. (a) What claims
could Prissy raise against BofK for the HAIR and
other telephonic transaction (telephc telephone check) debits?
(b) Does BofK have
any defenses?
(c) Should BofK pay
the claim(s)?
3. (a) What claim
could BofK raise against AQB? (Assume that the
law where AQB is located
is the same law that exists in Texas in the year
2002).
(b) Are there any
defenses available to AQB?
4. (a) Can any claim
be made by BofK against the other banks (other
than AQB) that took
the additional items and deposited them in March,
April, May and thereafter?
(Assume that the remainder of the banks who
accepted telephonic
transaction check deposits have adopted the UCC as
found in the year
2002 in Wisconsin, USA.)
(b) If so, who should
prevail, and why?