Essay 7,9,10

Essays 10: Uniform Commercial Code

Question #1

The basic and other principles of contract formation JoJo Parachutes and Ivory Silk Limited will want to follow under UCC Article 2 are:

· Any manner that shows agreement. The two parties may make a contract in sufficient manner to prove they reached an agreement which can be through words, writings or their conduct but the most preferred is through writing.

· Moment of making is not crucial. This will make UCC to enforce a deal despite it being difficult in terms of common law to elaborate exactly when it was formed.

· One or more terms may be left open. Under the UCC, a court can proceed to enforce a bargain despite one or more terms were left open because under UCC, omission is not regarded fatal as long as there are basis to give damages to the party which is injured where the court will proceed to fulfill that.

The writing and enforceability requirements include: statute of frauds where UCC requires any sale of goods priced $500 or more to be in writing where the writing need not to completely summarize the agreement because the code only requires an indication that the writing is sufficient to elaborate that the involved parties made a contract. The writing it must be signed by the defendant that is the party which is claiming there was no deal.

Other additional and different terms are only quantity stated are enforceable. Quantity is a very essential term and need to be highlighted in writing because the code will proceed to enforce the contract only up to the quantity of goods stated in the writing.

Question #2

First Point

The following six things Andrew will look for to determine if the promissory note from J&J Limited is negotiable are:

· The promissory note must be in writing.

· The promissory note must be signed by J&J Limited.

· The promissory note must contain an unconditional promise or order to pay.

· The promissory note must state a definite amount of money that is very clear and precise giving all the necessary details.

· The promissory note must be payable on demand or a definite time.

· The promissory note must be payable to order or to bearer.

Second Point

Each of these six things is necessary as follows:

· The note needs to be in writing in order to prevent future misunderstandings, reduce dispute risks based on the payments, time frames of the service etc., provide proof of what is promised in the note among others.

· The note needs to be signed to proof that it is a legal document and avoid any dispute risks from occurring.

· The note containing an unconditional promise or order to pay helps J&J Limited to indicate that it owes the money and it intends to pay it.

· The note stating the amount of money to be paid and within specific time frames helps to ensure that no conflicts will be experienced in future if J&J Limited fails to commit to its promise because Andrew will be able to follow the right channel to request the money.

· The note being payable on demand or at definite time helps Andrew to request for payments at the right period as indicated in the note.

· The note being payable to order or bearer helps to specifically determine the person who will be paid without bringing any confusion.

Question #3

If I were the loan officer for Hometown, I would go about protecting the Bank's investment as follows:

· Ensuring that the bank has priority in the collateral. This will lead to three sub steps:

· Ensuring that our bank has a perfected security interest in order to take priority over everybody else’s.

· In case our bank has not perfected as well as the other parties involved, then I will ensure that our interest to attach comes first of them all in order to get a priority.

· Ensuring that our bank is the first to file or perfect security interest but not anybody else which will help our bank to win between all perfected security interests.

· When Aqua Taste defaults by either failing to pay the $1,000,000 debt or enters bankruptcy proceedings, I will follow the following options:

· Taking possession of the Collateral by filing suit against Aqua Taste to obtain a court order to initiate Aqua Taste to deliver the collateral or even act on our own without the court order to take the collateral without a breach of the peace.

· Disposition of the collateral after obtaining its possession where will decide to dispose the collateral or instead retain it to elaborate full satisfaction of the debt. This can allow us to sell, lease or perform a disposal which is a reasonable manner in terms of commercial activities.

· In case Aqua Taste proceeds to pay the full debt after agreeing to our agreement based on the payment of the debt, our bank will proceed to complete a termination statement which is basically a document that elaborates or indicates that it no longer in the collateral have any claims of a security interest.