Law Commons^™

Implementing The Standby Letter For Credit Convention With The Law Of Wyoming, James J. White

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For the first time in American practice, we propose to implement a convention by a federal adoption of law previously enacted by the states – from Wyoming to New York – to implement the Convention on Independent Guarantees and Standby Letters of Credit (“Convention”).1

Warranties In The Box, James J. White

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Thousands of times each day, a buyer opens a box that contains a new computer or other electronic device. There he finds written material including an express "Limited Warranty." Sometimes the box has come by FedEx directly from the manufacturer; other times the buyer has carried it home from a retail merchant. Despite the fact that it is standard practice for the manufacturer to include a limited written express warranty on the sale of such products,' and despite the fact that both the manufacturer and the buyer believe that warranty to be legally enforceable, the law on its enforceability is …

Chuck And Steve's Peccadillo (Symposium: Threats To Secured Lending And Asset Securitization), James J. White

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Are investors in securitized receivables to be treated as the owners of an asset whose sale has taken it beyond the reach of the trustee in bankruptcy of their sellers? O are they to be treated as holders of a security interest in the transferred asset who have left behind an interest in the sellers' hands that would cause the asset to be subject to claims and interference by the sellers' grasping trustee? By adopting contrasting-arguably conflicting-statements in two subsections of a single section, the drafters of 1999 Article 9 have thrust this issue in the faces of courts and …

Contracting Under Amended 2-207 (Freedom From Contract Symposium), James J. White

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Amended Section 2-207 of the Uniform Commercial Code1 (the Code) states new contract rules. I call these "contract rules" to avoid the labels of contract formation and contract interpretation. These new rules cure many of the problems presented by current Section 2-2072 and remind courts that the purpose of Section 2-207 is to interpret a contract that has been made, not to see if a contract exists. One is tempted to label current Section 2-207 as a contract formation provision-and to some extent that would be right-but most of this Section's work has been in contract interpretation, not in contract …

Default Rules In Sales And The Myth Of Contracting Out, James J. White

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In this article, I trace the dispute in the courts and before the ALI and NCCUSL over the proper contract formation and interpretation default rules. In Part II, I consider the Gateway litigation. In Part III, I deal with UCITA and the revision to Article 2. In Part IV, I consider the merits of the competing default rules.

Reverberations From The Collision Of Tort And Warranty (Products Liability Law Symposium In Memory Of Professor Gary T. Schwartz), James J. White

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In his famous Stanford Law Review article, When Worlds Collide,' Professor Marc Franklin foretold the troubles for American law in the impending collision of the tort of strict liability with the warranty of merchantability.2 We daily suffer the reverberations from that collision as courts struggle with the proper application of strict tort liability and breach of warranty in products liability cases. Lawyers who have not studied Article 2 of the Uniform Commercial Code (U.C.C.) are surprised to learn that virtually every buyer who has a strict tort claim for an injury caused by a defective product also has a potential …

Good Faith And The Cooperative Antagonist (Symposium On Revised Article 1 And Proposed Revised Article 2 Of The Uniform Commercial Code), James J. White

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One of Karl Llewellyn's most noted achievements in the Uniform Commercial Code was to impose the duty of good faith on every obligation under the Uniform Commercial Code.1 Some (I am one) have privately thought that imposition of this unmeasurable, undefinable duty was Llewellyn's cruelest trick, but no court, nor any academic writer, has ever been so bold or so gauche as to suggest that good faith should not attend the obligations of parties under the UCC. Notwithstanding this silent indorsement of the duty of good faith, the courts2 and commentators3 have had difficulty in determining what is and what …

Autistic Contracts (Symposium), James J. White

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In this paper I address the question whether the law should affirm the offeror's inference and should bind the offeree to the terms proposed by the offeror even in circumstances where the offeree may not intend to accept those terms and where an objective observer might not draw the inference of agreement from the offeree's act. Modem practice and current proposals concerning contract formation in Revised Article 2 and in the Uniform Computer Information Transactions Act (nee Article 2B) press these issues on us more forcefully than old practices and different law did. 1 But contractual autism is not new; …

Freeing The Tortious Soul Of Express Warranty Law, James J. White

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I suspect that most American lawyers and law students regard express warranty as neither more nor less than a term in a contract, a term that is subject to conventional contract rules on formation, interpretation, and remedy. Assume, for example, that a buyer sends a purchase order to a seller and the purchase order specifies the delivery of 300 tons of "prime Thomas cold rolled steel." The acknowledgment also describes the goods to be sold as "prime Thomas cold rolled steel." Every American lawyer would agree that there is a contract to deliver such steel and furthermore would conclude that …

Form Contracts Under Revised Article 2 (Symposium: Consumer Protection And The Uniform Commercial Code), James J. White

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The current draft of section 2-206 in Revised Article 2 of the Uniform Commercial Code ("UCC") entitled "Consumer Contract: Standard Form"1 presents a unique and threatening challenge to the drafters of consumer form contracts. In earlier drafts, one part of the section applied to both to commercial contracts and consumer contracts. It required that "one manifest assent" to any form contract, commercial or consumer, in order for it to be binding.2 Bowing to commercial opposition in the most recent version, the drafters have omitted all reference to commercial contracts. As the section stands, it applies only to consumer contracts.

Rights Of Subrogation In Letters Of Credit Transactions, James J. White

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The past twenty years have seen more than a dozen cases, in which parties to letter of credit transactions have sought subrogation to the rights of the person they have paid or to the rights of the persons on behalf of whom, they have acted.' The most obvious case arises when the issuer of a standby letter of credit pays a beneficiary on a debt that is owed to the beneficiary by a bankrupt applicant. Having failed to take 'collateral from the applicant, the issuer seeks to be subrogated to the security interest of the beneficiary. Failing subrogation, the issuer …

The Influence Of International Practice On The Revision Of Article 5 Of The Ucc, James J. White

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The topic of this symposium is the influence that international law has had on domestic law of the United States. I believe that the story of the revision of Article 5 of the Uniform Commercial Code fits here, but some might dispute that. Although it is certainly fair to say that international practice-in a sense international law-was a powerful influence on the revision of Article 5 of the Uniform Commercial Code, that practice, and the way in which that influence was exerted were almost entirely sui generis to the letter of credit law, practice and history.

Reforming Article 9 Priorities In Light Of Old Ignorance And New Filing Rules (Symposium: 'Managing The Paper Trail': Evaluating And Reforming The Article 9 Filing System), James J. White

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The other papers in this Symposium demonstrate that we have the technical capacity to build a filing system that will exceed the expectations of Grant Gilmore in every dimension.1 With more thought about what is put into the system and more clever software to get it out, the most sophisticated system possible under current technology will store and produce enough information about a debtor to give the ACLU a fright. All of the issues on improving the filing system are important, but I do not concern myself with any of them directly. I am here discuss a different question. In …

Work And Play In Revising Article 9 (Symposium On The Revision Of Article 9 Of The Uniform Commercial Code), James J. White

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For Professors Harris and Mooney the time has come to distinguish between work and play. Debating whether security is efficient is play. Revising Article 9 is work. Even Professor Schwartz does not argue for the abolition of Article 9; he merely reiterates the "puzzle" of secured credit and argues in his playful fashion that security might not be efficient.' Were it not for the fact that this debate might give us some insights about certain priority rules (such as those having to do with purchase money), it would be pure intellectual masturbation, a game with no purpose other than to …

Revising Article 9 To Reduce Wasteful Litigation, James J. White

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For reasons that are unclear to me, the committees reviewing the articles of the Uniform Commercial Code and drafting revisions are congenitally conservative. Perhaps these committees take their charge too seriously, namely, to revise, not to revolutionize. Perhaps their intimate knowledge of the subject matter exaggerates the importance of each section and consequently magnifies the apparent size of every change. In any case, my own experience with two such committees tells me that the members quickly become focused on revisions and amendments that any outsider would describe as modest. To the extent that the revision of any of the articles …

Goldstein's Curse, James J. White

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ON April 16, 1980, a man using the name Marvin Goldstein opened a bank account at a Baltimore branch of Union Trust Company. He deposited $15,000 in cash. He told the branch manager that he planned to establish a Baltimore office of his father's New York business, "Goldstein's Precious Metals and Stones." Goldstein identified himself with a New Jersey driver's license and gave a bank reference from New York. On May 6, Goldstein deposited a check for $880,000 at another Union Trust branch near the branch where he had opened the account. Words on this check indicated that it was …

The Decline Of The Contract Market Damage Model, James J. White

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In law school every American lawyer learns that the conventional measure of damages for breach of a sales contract is the difference between the contract price and the market price. Even before these rules were embodied in the Uniform Sales Act and the Uniform Commercial Code (UCC), they were a staple of Anglo-American common law. They remain the rules with which a court would determine damage liability not only for the sale of goods, but also for the sale of real estate and securities.

Dancing On The Edge Of Article 9, James J. White

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Despite the fact that Article 9 is a much more comprehensive personal property security statute than was ever found in American law prior to its enactment, cases continue to present issues on the scope of the Article. Gone are the cases in which a court was called upon to determine whether a "conditional sales contract" could be dealt with under the "factor's lien" law; it is now clear that all such personal property security devices are governed by Article 9. Yet many problems remain for the unwary lawyer. I will identify several and deal in detail with three of these …

Efficiency Justifications For Personal Property Security, James J. White

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In February of 1983 Pan American World Airways issued 100 million dollars of convertible secured notes. As security for these notes it put up three Boeing 747 SP aircraft, two 747-100 aircraft, and one McDonnell Douglas DC10-30. The appraised value of these aircraft was 157 million dollars. To the extent possible under the law, Pan American made these aircraft subject to the claims of the owners of the new notes. On default, the note holders would have the first claim on these aircraft, would have the right to repossess them outside of bankruptcy, and would have the right to the …

The Recent Erosion Of The Secured Creditor's Rights Through Cases, Rules And Statutory Changes In Bankruptcy Law, James J. White

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One can view the law of creditors' rights as a series of cyclesin which alternatively the rights of the creditor and then those of the debtor are in ascendancy. Looking back through Americanlegislative history, one sees both the state legislatures and the Congress intervening on behalf of debtors in a variety of ways onmany occasions. An early example of such intervention was the enactment, particularly in the Midwest and West, of generous exemption laws that removed a variety of property beyond the reach of general creditors. A second example is the enactment of usury laws, which continue to be a …

Contract Law In Modern Commercial Transactions, An Artifact Of Twentieth Century Business Life?, James J. White

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Diligent first year law students study contract law with a passion previously reserved for romantic objects and religious idols. Their professors lead them in extensive and difficult intellectual explorations of the wilds of contract law. There are careful analyses of why damage recovery X will stimulate performance Y, why recovery A is appropriate to encourage the aggrieved party to return to the market, and so on and so forth. Lurking behind this year long analysis are several inarticulate hypotheses: that they make rational evaluations of the threat of legal sanctions; that they respond in other varied and subtle ways to …

Eight Cases And Section 251, James J. White

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[A] continuing sense of reliance and security that the promised performance will be forthcoming. . . is an important feature of the bargain-so states Comment 1 to section 2-609 of the Uniform Commercial Code. At common law, one party to a contract might suffer considerable and justifiable anxiety about the other party's willingness or ability to perform and yet have no legal basis for cancelling the contract or for procuring additional assurances from the other party. Section 251 of the Restatement (Second) of Contracts is designed to provide a remedy for one party's reasonable fears that the other party to …

Allocation Of Scarce Goods Under Section 2-615 Of The Uniform Commercial Code: A Comparison Of Some Rival Models, James J. White

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Section 2-615 of the Uniform Commercial Code authorizes a contract seller to allocate goods in short supply when full performance has become commercially impracticable. Most of the cases under and commentary on that section have focused on the issue of commercial impracticability. The allocation aspects of the section have attracted much more modest attention in the cases and in the scholarly journals. The purpose of this article is to examine critically the allocation rule set out in section 2-615(b). That subsection authorizes a seller, upon a finding of commercial impracticability, to allocate "in any manner which is fair and reasonable." …

Evaluating Article 2 Of The Uniform Commercial Code: A Preliminary Empirical Expedition, James J. White

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A proponent of commercial law codification, Mr. Eaton was one of the first American lawyers to perceive that mere codification of the law did not necessarily produce certainty and lack of discord in the law of commercial transactions. Indeed, in the same article Eaton reveals that of the 1,091 cases that had arisen under the Negotiable Instruments Law, only 704 cited the Act and in the other 387 "the Negotiable Instruments Law [was] ignored by the courts in the decisions, and (so far as the reports show) by the counsel in these cases...." Unlike Bentham, Carter, and Field, each of …

The Abolition Of Self-Help Repossession: The Poor Pay Even More, James J. White

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In this paper I propose to identify possible ways in which a court could uphold the constitutionality of section 9-503 without an explicit rejection of Fuentes v. Shevin. It is my thesis that Fuentes v. Shevin is probably an undesirable outcome, and that the application of the same doctrine to self-help repossession is certainly undesirable and would constitute due process gone berserk. My arguments will not be novel; each has been suggested by the courts that have considered this matter, or by the briefs of the lawyers who have argued these cases. I cannot even claim to have collected the …

Enforcement Of A Promise In Modern American Law (Gendai Amerikaho Ni Okeru Yakusoku No Kyosei), Whitmore Gray

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A series of seminar lectures given by Whitmore Gray in Tokyo, Japan during October 1968. Six articles were subsequently published in “Kaigai Shojihomu” (The International Business Law Bulletin) between July 1969 and May 1970.

The sixth and final installment describes the history of contractual enforcement in the U.S. and highlights changes introduced through adoption of the UCC.

Representing The Low Income Consumer In Repossessions, Resales And Deficiency Judgment Cases, James J. White

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The goal of this article is to lend a helping hand to the debtor's lawyer in his job of defending deficiency judgment suits brought following the repossession and resale of a debtor's encumbered personal property. Although some of the following discussion is relevant to the defense of any creditor's suit, and some applies to representation of the debtor prior to repossession or resale, the focal point of the discussion is the low-income consumer who has lost his automobile, television or some other "hard good" and has become a defendant in a suit brought by his secured creditor for a deficiency …

Remedies For Breach Under The Uniform Commercial Code (Ucc Ni Okeru Keiyaku Furiko Ni Taisuru Kyusai), Whitmore Gray

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A series of seminar lectures given by Whitmore Gray in Tokyo, Japan during October 1968. Six articles were subsequently published in “Kaigai Shojihomu” (The International Business Law Bulletin) between July 1969 and May 1970. The fifth installment discusses the difficulty of remedies and various methods of enforcement.

Contract Interpretation And The Uniform Commercial Code (Ucc Ni Okeru Keiyaku No Kaishaku), Whitmore Gray

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A series of seminar lectures given by Whitmore Gray in Tokyo, Japan during October 1968. Six articles were subsequently published in “Kaigai Shojihomu” (The International Business Law Bulletin) between July 1969 and May 1970. The third installment introduces the basic principles of contract interpretation.

Contract Interpretation Under The Uniform Commercial Code (Ucc Ni Okeru Keiyaku No Kaishaku), Whitmore Gray

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A series of seminar lectures given by Whitmore Gray in Tokyo, Japan during October 1968. Six articles were subsequently published in “Kaigai Shojihomu” (The International Business Law Bulletin) between July 1969 and May 1970.

The fourth installment discusses further considerations and principles that impact contract interpretation.