Commercial Law Commons^™

Contracts--Consideration--Inadequacy Of Consideration As A Factor In Determining Unconscionability Under Section 2-302 Of The Uniform Commercial Code, Michigan Law Review

Michigan Law Review

Section 2-302 of the Uniform Commercial Code (Code) provides that a court may refuse to enforce all or part of a contract if it finds that the contract, or any part of it, was unconscionable when made. In American Home Improvement, Inc. v. MacIver the Supreme Court of New Hampshire apparently held that a price substantially in excess of the value of the goods and services sold was sufficient in itself to constitute unconscionability under this provision of the Code. The high price was at least in part attributable to high time-credit charges, and, as noted by the court, the …

The Uniform Commercial Code Comes Of Age, Roy L. Steinheimer Jr.

Michigan Law Review

Once upon a time back in the elegant and well-ordered Victorian age, a new organization known as the National Conference of State Boards of Commissioners for Promoting Uniformity of Legislation in the United States undertook the task of drafting a Negotiable Instruments Law (NIL) for adoption by the legislatures of the various states. The law was finally prepared and recommended by the Commissioners for adoption in 1896, and, by December of 1900, fifteen states had adopted it. In that month, Dean Ames, of the Harvard Law School, loosed a blast at this new law in an article in the Harvard …

Secured Transactions-Insurance-A Security Interest In The "Proceeds" Of Secured Collateral Does Not Include Insurance Proceeds-Universal C.I.T. Corp. V. Prudential Investment Corp., Michigan Law Review

Michigan Law Review

In return for a loan, a debtor executed a promissory note to codefendant, Prudential Investment Corporation, and entered into a written agreement to secure this note, designating as collateral a semi-tractor and the proceeds therefrom. Under this type of arrangement, Prudential's security interest would attach automatically to any property received from a sale, exchange, or other disposition of the tractor. Petitioner, Universal C.I.T. Corp., held the conditional sales contract which was executed in financing the purchase of the tractor and was named as loss payee in the insurance contract covering the tractor. When the tractor was totally destroyed, petitioner collected …

Government Contracts-Adoption Of Uniform Commercial Code As The Applicable Federal Law In An Action For Breach Of Government Contract-United States V. Wegematic Corp., Michigan Law Review

Michigan Law Review

Appellant contracted to supply the Federal Reserve Board with a "truly revolutionary" electronic digital computing system. After twice requesting postponement of the delivery date, appellant informed the Board that delivery under the terms of the contract would be impracticable because of unforeseen engineering difficulties that would require at least one year and one million dollars to overcome. Appellant asked for cancellation of the contract, but the Board refused and brought a suit for damages. Both parties conceded that federal law governed the action; appellant, however, argued that section 2-615 of the Uniform Commercial Code (Code) should be adopted as the …

Gilmore: Security Interests In Personal Property, Jerry P. Belknap

Michigan Law Review

A Review of Security Interests in Personal Property 2 vols. By Grant Gilmore

Bankruptcy Preferences-Secured Transactions-Security Interest In After-Acquired Property Is Voidable Preference If Received Within Four Months Of Bankruptcy-In Re Portland Newspaper Publishing Co., Michigan Law Review

Michigan Law Review

In an effort to provide employment for several hundred workers who had lost their jobs in an unsuccessful strike against Portland's two largest newspapers, the local printers' unions and several civic leaders organized the Portland Reporter Publishing Co. (Reporter) to publish a rival newspaper. The unions also formed the Rose City Development Co. (Rose City), which leased facilities and equipment to Reporter and subsequently made several emergency operating loans to it. These loans were secured by an agreement designating as collateral all of Reporter's previously unsecured accounts receivable, both present and after-accruing. This type of agreement -securing after-acquired property of …

Bank Statements, Cancelled Checks, And Article Four In The Electronic Age, Norman Penney

Michigan Law Review

My task was to prepare a short article dealing in some depth with specific problems which have arisen under Article Four of the Uniform Commercial Code (Code). Unfortunately for purposes of criticism, but happily for those affected by Article Four, a canvass of recent reported cases as well as bank operations people and bank counsel has revealed very few problems of any significance to either the general practitioner or even the so-called commercial law specialist. This prompts two comments: (1) Article Four seems to be working so smoothly that to develop a "problem" would be to make a mountain out …

The Trustee In Bankruptcy As A Secured Creditor Under The Uniform Commercial Code, Frank R. Kennedy

Michigan Law Review

The thesis of this article is that a trustee cannot exploit the advantage of the lien or security of any creditor unless he can avoid it and displace a creditor. Moreover, when he can and does avoid a lien and displace a creditor, he can enforce the rights of that creditor as against any lien or interest otherwise indefeasible in bankruptcy only to the extent of the lien or security of the creditor he displaces.

Seller's Damages Following Resale Under Article Two Of The Uniform Commercial Code, Robert J. Nordstrom

Michigan Law Review

The seller's right to resell contracted-for goods following a breach by the buyer is set forth in section 2-706 of the Uniform Commercial Code (Code). That section also contains a statement of the conditions placed upon the exercise of that right and provides the measure of recovery if the resale is made "in good faith and in a commercially reasonable manner":

[T]he seller may recover the difference between the resale price and the contract price together with any incidental damages allowed under the provisions of this Article (Section 2-710), but less expenses saved in consequence of the buyer's breach.

In …

The Irregular Issuance Of Warehouse Receipts And Article Seven Of The Uniform Commercial Code, Douglass G. Boshkoff

Michigan Law Review

The draftsmen of Article Seven were well aware of the problems caused by irregular issuance of warehouse receipts and there will be fewer problems of irregularity under the Code for two reasons. First, the Code's formal requirements for issuance of warehouse receipts are less stringent than are those imposed by the UWRA, thereby lessening the chances of any irregularity occurring. Second, the Code contains two sections which aim to minimize the consequences of any irregularities which may occur. In this article I will discuss the types of defects that have been troublesome over the years, focussing on the ways in …

Protection Of The Installment Buyer Of Goods Under The Uniform Commercial Code, Robert H. Skilton, Orrin L. Helstad

Michigan Law Review

The present topic for discussion, protection of the installment buyer under the Code, is part of a larger topic-protection of the consumer under the Code. The remarks that follow sometimes apply generally to the status of the consumer under the Code. There are times when no distinction should be made between our model installment buyer and other consumer buyers.

Article Eight: A Premise And Three Problems, Ernest L. Folk Iii

Michigan Law Review

This essay concerns itself with a basic premise and three problems concerning investment securities under Article Eight of the Uniform Commercial Code (Code). Although some amount of relevant exposition is necessary to make the arguments intelligible, general familiarity with the essentials of the Code's treatment of investment securities is assumed.

Reclamation Of Goods From A Fradulent Buyer, Robert Braucher

Michigan Law Review

Sections 2-702(2) and (3) of the Uniform Commercial Code (Code), defining the right of a seller to reclaim goods from an insolvent buyer, have for years been the subject of controversy. The sponsors of the Code have stood firm on the basic policy of these sections for more than twenty-five years, but, in its 1966 Official Recommendations for Amendment of the Uniform Commercial Code, the Permanent Editorial Board includes an amendment striking the words "or lien creditor" from section 2-702(3). That change has already been made in six states: California, Illinois, Maine, New Jersey, New Mexico, and New York. In …

Actions On Commercial Paper: Holder's Procedural Advantages Under Article Three, Stanley V. Kinyon

Michigan Law Review

The discussion will also be concerned primarily with the usual action "on the instrument": an action by the holder to enforce payment by a person who has signed it as maker, acceptor, certifier, drawer, indorser, or guarantor and has thus become "liable on" it. These instruments, of course, may be involved in other types of actions, such as: an action for conversion of the instrument (section 3-419); an action to recover damages for breach of the warranties of a collector or transferor (sections 3-417 and 4-207); an action to compel indorsement (section 3-201); an action to enjoin payment (section 5-114(2)(b)); …

Commercial Law--A Farmer Is Not A "Merchant" Under The Uniform Commercial Code--Cook Grains, Inc. V. Fallis, Michigan Law Review

Michigan Law Review

Plaintiff grain company allegedly entered into an oral contract to purchase 5,000 bushels of soybeans from the defendant farmer. The grain company signed a written integration of the alleged oral agreement and mailed it to the farmer, with a request for his signature. The farmer neither signed the document nor attempted to communicate with the grain company and later refused to deliver the soybeans pursuant to the terms of the plaintiff's memorandum. In an action for breach of contract, the grain company contended that the farmer was precluded from relying on the statute of frauds, as incorporated in the Uniform …

Foreign Lienor Cannot Prevail In Ohio Against Subsequent Good Faith Purchaser Who Holds Ohio Certificate Of Title- Commercial Credit Corp. V. Pottmeyer, Michigan Law Review

Michigan Law Review

Williams purchased an automobile in West Virginia from plaintiff's assignor on a conditional sales contract. The security interest was duly recorded in West Virginia and noted on the certificate of title. Before paying any of the purchase price, Williams fraudulently procured another West Virginia certificate of title free of notice of liens. Relying on the fraudulent certificate, the defendant bought the car from Williams at an Ohio automobile auction and obtained an Ohio certificate of title. The plaintiff brought suit in Ohio to recover the vehicle and obtained a favorable judgment, which was affirmed by an Ohio court of appeals. …

Ftc May Determine Whether Advertisements Containing Therapeutic Claims In Promotion Of Health Books Are Deceptive- Rodale Press, Inc., Michigan Law Review

Michigan Law Review

Rodale Press advertised that the ideas and suggestions in its publication, The Health Finder, would increase life span, prevent various diseases, and permit savings on medical and dental expenses. The Federal Trade Commission challenged the advertising claims, which were substantially restatements of claims made in the book, on the ground that adherence to the book's suggestions would not effect the promised results. The hearing examiner denied Rodale's motion to dismiss the complaint. On request for permission to file an interlocutory appeal from the dismissal, held, request denied, one commissioner dissenting. The Commission may challenge the collateral claims in …

An Inquiry Into The Utility Of "Domicile" As A Concept In Conflicts Analysis, Russell J. Weintraub

Michigan Law Review

No attempt is made here to conduct an exhaustive case study of any one particular area in which the concept of "domicile" is used as a tool for analysis in the conflict of laws. A number of thorough and useful studies have been made in narrow areas and are cited at appropriate places in the body of this article. Instead, this article will review the use of "domicile" in analyzing certain typical conflicts problems, particularly its use as the contact or pointing word in choice of law rules concerning the testate and intestate distribution of movables, and, as is newly …

In Personam Jurisdiction Over Nonresident Manufacturers In Product Liability Actions, Harry B. Cummins

Michigan Law Review

A wide divergence of opinion exists regarding the wisdom as well as the constitutionality of extensive jurisdiction through the use of liberally drafted and construed "long-arm" statutes. Hesitance may result from a fear of burdening a defendant with the inconvenience and expense of a foreign suit brought against him solely for the purpose of harassment. While this comment does not advocate the extent to which a court should assert the jurisdictional powers conferred on it by a given "long-arm" provision, it examines the scope of jurisdiction constitutionally permissible over nonresident manufacturers in product liability cases with a view toward formulating …

The Corporate Mortgage Under Article 9 Of The Uniform Commercial Code And The New York Solution, George C. Coggins

Michigan Law Review

A corporate mortgage has been defined as "an indenture intended to convey property, real and personal, tangible and intangible, to a trustee for bondholders, as security for the bonds issued and to be issued thereunder" by a corporation. This financing device, utilized by many large corporate organizations, has grown to be of paramount importance in the field of corporate financing, and the lack of attention given by the Code to the long-term debts of corporations has raised serious questions of filing procedures. Discussion of the novel treatment accorded by New York to the problem of perfecting security interests in corporate …

The Commerce Clause Held No Limitation To The Jurisdiction Of Federal Courts-Wahl V. Pan American World Airways, Inc., Michigan Law Review

Michigan Law Review

Three wrongful death actions were brought in a federal district court in New York by United States citizens as survivors of passengers killed in the crash in Turkey of an airplane owned and operated by defendant Middle East Airlines (MEA). MEA is a Lebanese corporation operating in the Middle East, Europe, and Africa, whose United States sales are made by its general sales agent, Pan American World Ainvays, Inc. The court held that maintaining a New York office and entering into a general sales agency agreement with Pan American to promote travel on MEA of passengers originating in the United …

Sovereign Immunity Restricted To Noncommercial Activity-Victory Transport Inc. V. Comisaria General De Abastecimientos Y Transportes, Michigan Law Review

Michigan Law Review

Although frequently criticized, the established doctrine of absolute sovereign immunity has long prevented suits in the courts of the United States against foreign nations without their consent. The Court of Appeals for the Second Circuit, however, in ,em>Victory Transport Inc. v. Comisaria General de Abastecimientos y Transportes, affirmed a district court order compelling arbitration between an American shipowner and the Spanish Ministry of Commerce in accordance with the terms of a contract to carry wheat from Alabama to Spain. Although the Spanish Consul asserted that the Ministry, as a branch of the Spanish government, was immune from suit …

Passenger Carrier's Liability Extended Beyond Its Own Line By Ticket Sale Transaction--Ephraim V. Safeway Trails, Inc., Michigan Law Review

Michigan Law Review

Plaintiff, a Negro woman, purchased a roundtrip bus ticket in New York City for travel between there and Montgomery, Alabama. The ticket was sold by defendant, an interstate common carrier licensed to do business in New York, and consisted of a strip of coupon tickets, each good for a separate portion of the journey over the lines of defendant and other independent carriers. Printed on the back of each coupon was a clause limiting defendant's liability to its own line.1 Defendant received a ten per cent commission on those connecting tickets it sold for the other lines, and on the …

Promotion By Oil Company Of Tba Products Held Violative Of Ftc Section 5--Goodyear Tire & Rubber Co. V. Ftc, Michigan Law Review

Michigan Law Review

The Atlantic Refining Company entered into an agreement with the Goodyear Tire and Rubber Company which provided that Atlantic would receive a commission on all tires, batteries, and accessories (TBA) sold by Atlantic's wholesale and retail dealers. This commission was to be paid Atlantic in consideration for assistance given in promoting Goodyear products to the independent Atlantic service station operators. After an investigation of these agreements the Federal Trade Commission issued a complaint against Goodyear and Atlantic charging them with violating section 5 of the Federal Trade Commission Act. Evidence introduced at a hearing before a Federal Trade Commission trial …

Icc Conditions Merger Approval Upon Retention Of Jurisdiction To Allow Inclusion Of Additional Railroads In The Future, Michigan Law Review

Michigan Law Review

In two recent merger proceedings under section 5(2) of the Interstate Commerce Act, Seaboard Air Line R.R. - Merger-Atlantic Coast Line R.R. and Norfolk & W. Ry. and New York, C. & St. L. R.R.-Merger, the Interstate Commerce Commission imposed conditions" whereby it retained jurisdiction over the proceedings for five years to allow specified railroads to petition for inclusion in the new railway systems. Their inclusion would be ordered if found by the Commission, after a full hearing, to be consistent with the public interest.

Recent Antitrust Developments-1964, Milton Handler

Michigan Law Review

Ever since the passage of the Sherman Act, the courts have consistently refused to permit the requirements of antitrust to be circumvented by the easy expedient of dressing a sale in the vestments of a sham agency agreement. In Dr. Miles Medical, where the Supreme Court first held vertical price fixing unlawful, the seller and buyer denominated their agreement as an "agency," but the Court properly concluded that it was, in fact, a sale. Likewise, in Standard-Magrane, the first occasion on which the Court considered section of the Clayton Act, the seller purported to appoint his customers as …

The Federal Power Commission Does Not Have Jurisdiction Over The Sale Of A Developed Leasehold Interest Of Gas In Formation-Marr V. Fpc, Michigan Law Review

Michigan Law Review

Independent gas producers erected producing wells upon certain land to extract leased mineral interests. This development of the leasehold supplied geological information from which the amount of gas reserves was estimated. The gas leasehold was then sold to Texas Eastern Transmission Company, an interstate pipeline company that sought additional reserves. Texas Eastern applied to the Federal Power Commission for a certificate of public convenience and necessity to connect its transportation system to the field. The FPC asserted jurisdiction over the sale of the leasehold in order to investigate the cost aspects of the transaction. Because the details of the sale …

Tying Arrangements Under The Antitrust Laws: The "Integrity Of The Product" Defense, F. Bruce Kulp Jr.

Michigan Law Review

One of the most frequently asserted defenses to an action under either the Sherman Act or the Clayton Act against a tying arrangement-a contractual limitation imposed by a manufacturer whereby the purchaser of the "tying product" agrees to purchase a related "tied product" only from the manufacturer of the tying product-has been that the tying was necessary to protect the good will or the integrity of the tying product. Whether the tied product is service for the tying product, another component in a system in which the tying product is used, repair parts for the tying product, or any other …

Copyrights-Limitations On Proprietor's Exclusive Right To Vend, David M. Ebel

Michigan Law Review

Plaintiff was the sole proprietor of copyrights on several educational toys. It had ordered a large number of these toys to be made by defendant manufacturer, but refused to accept them when tendered, claiming they were so defective in quality that their sale would impair plaintiff's reputation. When defendant manufacturer began selling the rejected toys to the co-defendants in order to recover its own investment in them, the plaintiff obtained a temporary restraining order against all defendants prohibiting further sales of the toys pending a determination of a motion for permanent injunction. The district court granted a preliminary injunction of …

Trademarks-Unfair Competition-Scope Of Federal Jurisdiction Under Section 43(A) Of The Lanham Act, Harry T. Edwards

Michigan Law Review

Plaintiff, a manufacturer and distributor of engine bearings and connecting rods for internal combustion engines, brought suit in a federal district court to enjoin the defendant from marketing and distributing the latter's products in containers which closely resembled those of the plaintiff, thereby falsely representing that the goods were produced by and originated with the plaintiff. The cause of action was based solely on section 43(a) of the Lanham Act. In dismissing the complaint, the district court ruled that any attempt to characterize the complaint as charging a "false description or representation" was without merit, and that "false designation of …