Law Commons^™

Article 5 - Recent Developments, James J. White

Other Publications

I. Mitigation in Letter of Credit Transactions Assume a Buyer has procured a letter of credit to pay for contracted goods but no longer wants the goods. The Buyer and the Issuer would like to force the Beneficiary to mitigate. Assume that both the Issuer and Applicant repudiate their obligation or that the Applicant has failed and the Issuer repudiates its obligation to pay under the letter of credit. At the moment of repudiation the price for a gallon of the underlying oil that is the subject of the letter of credit is $.75 and that the letter of credit …

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

Articles

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.

Ucc Proposals Concerning Consumer Transactions, James J. White

Other Publications

Professor Grant Gilmore once suggested that farmers would like a two section law. Section one would state "It shall be against the law to refuse to lend money to a farmer." Section two would state "It shall be against the law to collect a debt from a farmer." In a similar vein one might state the iron rule of consumer law, namely "No right that has ever been granted to a consumer, however ill considered and unjustified, may thereafter be withdrawn." Believing that some of the proposals for consumer protection that have been added in Revised Article 9 are not …

Harmonizing The Policy Of The Bankruptcy Code And Article 9, Edwin E. Smith, Elizabeth Warren, James J. White

Other Publications

In a true sense bankruptcy law--at least as represented by the 1978 Code--is in conflict, not in harmony, with Article 9. To a considerable degree (perhaps more than they realize) debtors and unsecured creditors got things they wanted from Congress by the adoption of the Bankruptcy Reform Act of 1978. It is doubtful that that Act could have been passed in any Congress before or since. In many ways, the rights of the debtor and of the unsecured creditors have been cut back since the adoption of the Bankruptcy Reform Act.

Letters Of Credit: Highlights Of Revised Article 5, Edwin E. Smith, James J. White

Other Publications

1. Under what circumstances is it bad faith for an issuer to honor a letter of credit in the face of an applicant's offer of proof of fraud by the beneficiary? 2. What is the issuer's obligation where there is a waiver by the applicant that the issue chooses not to honor? 3. What are the rights of transferees of transferable letters of credit and assigness of proceeds?

The Intersection Of Articles 2 And 9, Steven L. Harris, James J. White

Other Publications

I. Standard Form Contracts II. Buyer in Ordinary Course; Prepaying Buyer III. Consignments IV. Seller's Right to Reclaim Delivered Goods

Gas Sale Contracts Under The Uniform Commercial Code, James J. White

Book Chapters

In the last decade, many oil and gas lawyers have learned more than they wish to know about the Uniform Commercial Code (U.C.C.). Like it or not, Article 2 of the U.C.C. governs most contracts for the sale of natural gas. Section 2-107(1) draws a distinct line between leases, deeds, and other conveyances of minerals in place, on the one hand, and the sale of the minerals by the miner or producer after the minerals have been severed, on the other. The consequence of this rule is that Article 2 has little or nothing to say about the sale of …

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

Articles

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 …

Globalisation Of Contract Law: Rules For Commercial Contracts In The 21st Century, Whitmore Gray

Articles

This is a paper given at the Asia-Pacific Lawyers Association meeting held in Bangkok in November 1995. The author describes the principles of international commercial contracts published in 1994 by the International Institute for the Unification of Private Law. Professor Gray sees a new era of harmonisation of contract law. An appendix gives an abstract of a contract law decision given by an Austrian Court in 1994.

How To Think About The Federal Commerce Power And Incidentally Rewrite United States V. Lopez, Donald H. Regan

Articles

Almost sixty years after the "revolution" of 1937, we still do not have an adequate theory of the commerce power. The Court was right to abandon the theory of dual federalism epitomized by Carter v. Carter Coal Co.;' and it has got the right results in the major cases decided since then. But our post-1937 theory, whether before or after Lopez, is a mess. On the one hand, we have a collection of doctrinal rules that, if we take them seriously, allow Congress to do anything it wants under the commerce power. On the other hand, we continue to pay …

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

Articles

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 …

The Intersections Of Articles 2 And 9: Recommendations For Clarification And Revisions, Richard E. Speidel, James J. White

Other Publications

Both Article 2, Sales and Article 9, Secured Transactions are under revision. The process of coordination is underway, but there is still much work to do. The following materials identify the major issues at the intersections and some tentative solutions. All references are to the 1990 Official Text of the Uniform Commercial Code unless otherwise stated. When stated, references are to the October, 1995 Draft of Article 2 and the July, 1995 Draft of Article 9.

Warranties And Remedies On Breach: Proposed Revision Of Article 2 And Related Proposals Concerning Products Liability Law, Richard E. Speidel, James J. White

Other Publications

The following materials contain (1) the warranty provisions, §§2-313 through 2-318, from the October, 1995 Draft of Revised Article 2, Sales, with selected Reporter's Notes; (2) Discussion questions on warranties; and (3) A comparison of Revised Article 2 and the ALl's Products Liability Restatement (Tent. Draft #2, March 13, 1995), with discussion problems.

Harvey's Silence (Symposium: Letters To The Commission), James J. White

Articles

Harvey Miller has a reputation as a leading bankruptcy lawyer, and he deserves it. As his criticism shows, he understands why and how the Code changed the Act in 1978 and how the drafters of Chapter 11 erred. Better than all but a handful of other lawyers, Harvey Miller knows how to manipulate Chapter 11 to serve his clients' interests. He understands both the legal and practical intricacies of Chapter 11. Were I the CEO of a large and troubled company, I would hire Harvey Miller and gladly pay him twice what most other bankruptcy lawyers would charge. In short, …

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

Articles

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.

Advising The Neocapitalists, James J. White

Articles

I write to reflect on what American lawyers can and will do for these emerging free market economies. I am more skeptical than most.

Critical Rules In Negotiating Sales Contracts: The Lawyer's Job, James J. White

Other Publications

In my experience, lawyers begin negotiating only after the business people have decided upon the description and quality of the product, the time of delivery, and the mode and amount of payment. The lawyers are left with the pathological problems--who gets what in case of trouble. Most of those problems relate to the seller's responsibility if the product does not conform to the contract or otherwise fails to please the buyer. These failures can cause economic loss to the buyer, economic loss to a remote purchaser, or personal injury or property damage to immediate or remote parties. Third parties may …

The Effect Of Section 1-102(3) And 1-103 On Commercial Agreements Involving Ucc Tansactions: Should They Be Revised?, James J. White

Other Publications

Power to Modify Article 5 Obligations Under 1-102(3) and 1-203. see Sections 5-103(c) and 5-116(c) of Revised Article 5.

Persons speaking for issuing banks argued strongly in the Article 5 revision process that complete freedom of contract should prevail and that no provision should be made invariable . They argued successfully for the removal in current Section 5-109 of references to due care and they argued successfully against the inclusion of any similar obligation elsewhere in Article 5. Consequently Section 1-102(3) has no place to get a grip in Article 5--because no obligations of due care are expressed in the …

Proposed Revisions Concerning Products Liability Caveat Vendor, James J. White

Other Publications

Both industrial sellers and consumer sellers should look at proposals for revision of the sections relating to warranty liability in Article 2. Particularly important are the sections on warranty, express and implied, on third-party liability, disclaimers and limitation of remedy, notice, and statute of limitations. Using current law as a baseline, revised Article 2 increases sellers' liability in at least half a dozen ways and decreases it in no significant way.

The Emerging Article 2: Remedies For Breach Of The Contract For Sale, Richard E. Speidel, James J. White

Other Publications

Article 2, Sales is being revised by a Drafting Committee of the National Conference of Commissioners on Uniform State Laws. To date, the Drafting Committee has held eight meetings and two more are scheduled for early 1995 . The first reading of revised Article 2 occurred at the annual meeting of NCCUSL in August, 1994. A target completion date for the Article 2 project is August, 1996 .

Article 5: Highlights Of The Proposed Revision, James J. White

Other Publications

I. The Current Status of Article 5: Drafting, Approval and Promulgation--The Most Significant Changes or Clarifications -- II. The Most Contentious Issues in the Revision of Article 5 -- III. More Subtle Questions About Revised Article 5

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

Articles

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

Articles

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 …

State Regulation Of Commerce (Update), Donald H. Regan

Book Chapters

In the period covered by this supplementary article, the Supreme Court has decided a case or two a year on state regulation of commerce. Considered individually, none of the cases through mid-1989 seems destined to become a landmark in DORMANT COMMERCE CLAUSE doctrin. Collectively, however, the cases may indicate a decreasing emphasis on "balencing" and an increasing focus on preventing states from intentionally discriminating against out-of-state interests.

Stalking The Squeeze: Understanding Commodities Market Manipulation, Richard D. Friedman

Articles

This article addresses the perplexing and important problem of how to distinguish valid, large-scale trading activity from a squeeze. Part I analyzes and reformulates what I will call the price-impact test, according to which manipulation is conduct motivated by its impact on price. This test, I contend, states a necessary but not sufficient condition for characterizing conduct as a squeeze. Part II offers a substantially different test, which I call the modified-sanctions approach. Under this approach, the price-impact test is used as a preliminary safe-harbor standard. The modified-sanctions approach goes further, however, recognizing that the essence of a squeeze is …

Goldstein's Curse, James J. White

Articles

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

Articles

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

Articles

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

Articles

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

Articles

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 …