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Commercial Law Outline
Definition is defined as where one transfers title to the buyer for a price
Goods
Specially manufactured goods;
Unborn young of animals;
Growing crops;
Crops and fixtures which can be removed without material harm to the land and timber (removable by seller or buyer); and Minerals, and structures to be removed from land by the seller, not the buyer.
Not
"money in which the price is to be paid,"
"investment securities" (covered by Article 8); and
"things in action." UCC § 2-105(1), Comment 1.
Merchants need to adhere to reasonable business standards and honesty in fact (e. g. consumer could be on notice)
Choice of Law
Unlikely that a court will permit bifurcation of goods and services contracts – especially as one may be enforceable, and the other one may not me
Unified goods and services contracts will probably be governed by the Uniform Commercial Code
Specially manufactured consumer goods are goods
The definition of consumer goods also appears in a different section as "household items"
CISG doesn't include consumers
Formalization
Parole Evidence under Convention on the International Sale of Goods: -- will look to customs, and then to statutes
Gap Fillers
For security interests parole evidence can be introduced, and security agreements are usually not integrated
Mutual mistake can be reformed
after-acquired property clause can be implied in some circumstances
Uniform Commercial Code – Sales
Hierarchy of which will determine what "reasonable" is
Deal
Course of dealings
Trade practice: Evidence of a relevant usage of trade offered by one party is not admissible unless and until he has given the other party such notice as the court finds sufficient to prevent unfair surprise to the latter.
Uniform Commercial Code - Leases
Convention on the International Sale of Goods
Common law real estate
Magnuson-Moss
Warranties
Express: doesn’t need to be in writing, but puffing isn’t a warranty
Need to show
Warranty was made
Warranty was breached
Warranty caused ahrm
Extent of damages
Abiltiy to fed off other affirmative damages
Three alternatives to warranty privity --
Implied title warranty
implied Warranty of Merchantability
Uniform Commercial Code – Sales
Buyers in the ordinary courses of business
Sellers in the ordinary course of business
Pawnbrokers are never in the ordinary course of business
Uniform Commercial Code – Leases
Finance lease have the arranties run to the seler not the lessor – can’t be a disgusied sale
–special rules on page 84 in 3a-103-1-g
Convention on the International Sale of Goods
Fit for the purpose, and purpose to transport
Common law real estate
Magnuson-Moss
Atty’s fees -- eliminate vertical privity problem
Reducing warranties
Uniform Commercial Code – Sales
Buyers in the ordinary courses of business
Sellers in the ordinary course of business
Pawnbrokers are never in the ordinary course of business
UCC takes two views (freedom of contract and protection)
Unconscionability is for the prevention of oppression and unfair surprise
Good fair is a factor, in determining if it was really their own bargain, and consideration should be given to the fact that the probabiolity is small that a real price is intended to be exchanged for a psuedo-obvligation
Allocation of risk is okay Terms are merely an allocation of unknwon or undertrminable risks
Courts resolution
Sophistic and baragaining
Implied warranty by price
Usage of trade
What the words said, and how clear it was
Local states lemon laws
Convention on the International Sale of Goods can viciate them all
FTC mandates conspicuous disclosure of a use car's warranty protection in plain view
Uniform Commercial Code – Leases
Can imply a warranty of merchantability if merchant
Convention on the International Sale of Goods
Common law real estate
Magnuson-Moss
Relief is granted to a consumer who is damaged bvy the failyure of a warrantor to comply with any obligation under a written warranty
Terms and conditions must be disclosd
Nonperformance
Convention on the International Sale of Goods says taht excuse when unavoidable
Title -- leases have quiet enjoyment
Warranty of Title -- note: no state has made article 9 effective before 2001
Uniform Commercial Code – Sales (seems to treat both merchants and non-merchants alike)
Strict liability
Need specific language to disclaim warranty
Purchasers of a good get the title that the seller had
A seller can't transfer that which it has not
A seller can't transfer that which it has not
Voidable title: does not have good title but has the power to transfer title to a good faith purchaser for value (checks that bounce)
Uniform Commercial Code - Leases: covenant of enjoyment
warranty is that no third party hold a claim or interest that arose from an act or omission of the lessor that will interfere with the enjoyment
disclaiming must be specific unless the circumstances warrant otherwise
if someone tricks someone into thinking that he could convey (lease) good title the lessee gets to regain possession, but rent is now paid to the true other rather than the trickster
sublease
buyer or subleases from an existing lessee can only have right to the goods that are no better than those of the existing lessee
Convention on the International Sale of Goods
Implied warranty of title of the seller
Excluded from CIG is any issue regard rights of third parties, because it doesn't want to regulate the property of individuals
Pre-Uniform Commercial Code: A party to a transfer could convey no better title to goods than he had
Common law real estate
Implied warranty is created by statute and is impled with a transfer of deed
Warranty of quiet enjoyment
Warranty of further assurance
Often handled by title insurance
Magnuson-Moss
Entrustment differnts from voidable title in that the buyer must be in the ordinary course of business (not just a good faith purhcaser for value) and the seller must be a merchant in that type of good
Uniform Commercial Code – Sales (seems to treat both merchants and non-merchants alike)
Any estrustment of goods to a merchant of those goods, transfers all rights regardless of conditions -- if they sell it out from under you, you can't get it back from the new owner
Knowledge by the buyer of the other title ends this
Uniform Commercial Code - Leases
Convention on the International Sale of Goods
UK law
Does not allow an innocent buyer to prevail against the entruster
Common law real estate
Magnuson-Moss
Non-performance
Uniform Commercial Code – Sales
UCC speaks in terms of seller's excuse
Identified goods -- when the contract requires for its peerformance goods identified when the contract is made. It isnb't enough the seller happened to identify particular goods for the buyerm they have to be unique. Fungible goods can only be covered under 2-615
In the case of total loss of identified goods, the entire contract is voided
In the case of partial loss, the buyer can inspect and have the choice of voiding. -- and can make due allowance for the injury
Risk of loss is still on the seller, even if he qualifies for exuse
commodities
Default: seller who wants to claim has to notify the buyer of any claim by a justifiable excuse
An excused non-delivery is not a breach
Definition of force majeure is something that could not be avoided by good-faith compliance and was beyuond control
Seller's requirements
Performance has become impractical
Inapplicablity was due to soemthing that the parties exprelly or impledly agreed would charge the promisor's duty to perform
The promisor did not assume the risk that the continbgency would occur
The promisor seasiably notified the promisee of the delay in delivery or that the delivery would not occur at all
Multiple buyers
In cases where a seller that is claim excuse under §2-615, has more than one buyer, and has a limited capacity to perform, the seller must allocaiton production and delivery amopjng its customers in a fair and reasonable manner
American courts don't like to find themselves rewriting the contract to make for a more equitable distribution of goods given a shortage -- German, Hungarian do
Theorhetical problem with allowing for excuse given significant priace increae
Would establish a line by which oen is responsible for below, and one from above
Anything else would be the court rewriting the contract.
Some courts have interpreted the defence in terms of commercial impracticbility rules
Party made law
Parities can contract out of this -- for the purposes of a new force Majure cause
Uniform Commercial Code - Leases
Hell or highwater for fiance lease
Nonconcumer finance lease myust either be terminated or go forward with no reduction in rent
Identified goods
excuse
Convention on the International Sale of Goods
Excuses a party from performance when the inability was due to an impediment beyond his control
CISG applies to both buyers and sellers
CISG applies to all obligations, not just delivery
Excuse only happens when a third party supplies also has a valid basis of exuse
Common law real estate
Magnuson-Moss
Equitable remedies
Buyer’s when seller breaches
Goods
Common law: only available when inadequate
Uniform Commercial Code: unique, same policy as before but more liberal, or other proper circumstance’s
Hard to describe goods as unique
If price is the only unique thing, than a decree for specific performance would be price-based
Disruption that cover would mean would be a reason for specific performance
Test for unique: total situation which characterizes the contract.
Output requirements
In the old days things were contracts for sale
Right to replevin: If there goods are reasonably unavailable and the goods have been identified to the contracts
identifiable goods may be used for a security interst
Specific performance decrees are like contracts and the parties have to show that they can and will perform them
Can get specific performance in bankruptcy
If unsecured
Insolvency is discovered before delivery: can stop delivery before arrival. Seller’s right ends when the buyer gets the goods or is govern acknowledge my a third party carrier or bailer that the buyer now has the possession of the goods
Insolvency: Reclamation demand: 10 days of the buyer’s receipt of the goods if insolvent. No limit if misrepresentation -- seller’s rights are subordinated to a good faith purchaser for value
If filing for bankruptcy: reclamation demand must be in writing, bankruptcy court may choose to satisfy the sellers’ valid reclamation right with a lien or administrative expense claim, rather than goods, time limit for sellers’ demand is not removed in bankrucy even when there is a misrepresentation solvency (even in writing) – Uniform Commercial Code 10 day limt is 20, sellers’ reclamation right in subject ato all of the limits that exist on the right outside of bakrucy
Buyers who pre-pay and the seller has become insolvent, canrevoer if the seller becomes insolvent within ten day after receipt of the first installment on their price – goods must be identified
Validity of LDC
Uniform Commercial Code: if things are reasonable enforceable in the light of anticipated or actual harm
party that wrote the LDC has the burden of showing the reasonableness of it
LDC can be subject to foffset based on actual damages or enrichment.
Minority: could show damages in repudiation of a contract
Lost profit buyer (need acceptance of the goods or valid rejection, and there is no cover) – e. g. benefit of the bargain (on in the position that would have been
Usually most of the warranties in the Uniform Commercial Code are not disclaimed, except for consequential damages
Types of allowed consequential damages
(from a seller’s breach) Of any kind incuding preuly economic loss
of which the seller had reason to know of
damges caused in fact
would could not be prevented by cover or otherwise
"super consequential damages" – must show
personal injury or proper damges (no econmoic lsses)
priximate cause
incidental damages can be somewhat larger (e. g. reasonableness test)
Lost proft only applies to what one is contractually bound to do
Has acceptance occurred -- dispies arised over whether the bueyr waited to long to cover? The goods that th buyer purchased as a cover were substantially the same as the contrac goods, and the buyer didn’t pay too much for the contract goods
Acceptance – if it is too late to revoke acceptance, the buyer’s damages are limited to breach of warranty
Can deduct, for less value, but must give proper notice
If the buyer has paid the piurcahse price, the buyer may hold the goods as security for repayment of tis purchase price as well as for any expenses – and thebuyer cna resell the goods in a manner as an aggrieved seller -- damages are [return of price paid by buyer + cost + expense savedof cover]-[conract price – incidental damages]-consequential damges, _
Good faith from covering is without delay or reasonable price --
Not yet acceptance – or justifiable refused
Must be given in a reasonable time after the the buyer discovers orshould have disvered the breach
Incidental damages
(Value of conforing – value of nonconfirming )(+ incidental + consequential)
no goods (or goods rightfully dumped back)
right to cover -- it is optional -- buyer ends up getting the goods, and the seller pays the buyer for any additiona cost that the buyer incudrred in getting them.
right to contract market damages
timing issue
damges mesaure are set at the market priac at the time tha tth ebuyer leanred of the breach -- may not be the price of the goods at the originally primiced perforamces.
Place of perforamce – place of arrival of goods, unless the buyer rejects or rvokes accpetance after arrival
Breaches occur as of recent modificaitons
nominal damages may be awarded if the court finds that there was an overall benefit
Need to fix damages on the date of breach
Some court finds that where a market price is too wild, whenver the seller can prove that the actual loss was less
What the buyer does is irrelevant, the damages are fixed on the date of breach based on spot transfer
Additional problems for leases
Rights to cover
"lessor may otherwise default" -- lessor can recover the cost of putting things back in working order
new leases must be substantially similar to be considered a cover
for a new lease to cover it has to be substantially sinmilar
things would be discounted to present value – not in older Uniform Commercial Code number 2
leaes: a buy can accept a lease of a defective good and give it a haircut discounte back
Convention on the International Sale of Goods
Sets up dichotomy beween avoided contracts and non-avoided contracts
Can onyl declare a goods to be avoided if breach is funamental, or if delivery is not on time or place, or within a contraually agreed grace period
Under Convention on the International Sale of Goods, if a conract is avoided, both parties are relieved, but damges will be assessed
Specific performace: will be granted if the buyer doesn’t have the good year
Specific performance must be in line with the state courts law (which would be Uniform Commercial Code)
Specific performance to remedy a funadmental breach is available, but must be in line with local law (so would get the Uniform Commercial Code anyway)
Buyers have choice between contract-market and contract market
Consequential damages must be reasonable to know, even if they are preesonal injury
Real estate
Refusing to close can be granted specific performance
Have to show that money is inadaquate (not a problem with real estate)
buyer must be able to perform
can be paid for higher out of pocket costs
usually houses are sold as is
the courts have refused to grant specific performance in bate and switches
lost volume seller’s remedies
definition of lvs: those who can show that the the contract-market measure is inadauate to put the seller in as good a postion as peromrace would have done (e. g. lose a profit)
must show that the sale would have occurred
e. g. the only reason that the sales were made was that the buyer breached
seller was no operating at full capacity and could have made additional sales if the bueyr had not breached (e. g. retail toy stores wouldn’t be eligible)
definition of profit (including reasonable overhead) together with any incidental damages, due allowance for costs incurrend, and credit for proceeds of sale
profit is defined as contract price minus seller’s direct costs (variable costs) minus allocatable share of the sellers’ fixed costs or overhead
direct costs are also variable costs
we need to allocate the fixed costs
these clauses were probably put in for a component parts manufacture who has stopped production in midstead and haas sold things for scrap
can resell for scrap
must show that the seller’s aabilityt to seell these goods was greater than the current buyer’s demand for them
completing of manufature when stopped mistead
how much more would it cost
how much would it get for the scrap
how much the seller could get from the third party
bop is on the defendant to show that decision to stop is reasonable
Seller’s remedies: put the aggrived back where they were. Consensual shoudln’t eb allowed unless proviosn in the code
codal
Types of breaches by buyers
Wrongfully reject goods
Wrongfully revoke acceptance
Fail to make a payment when due
Anticpatoruoly repduiate the conract
Types of remedies
Sellers ability to limit damges
Withhold delivery
Stop delivery by aby bailee
Indentify goods to the contract in case of anticpatory repudiation
Resel and recover damges
Recover contrac-tmarket damges (or lost profits)
Sue for price
Can be said to be a right of specific performance for the seller
When available – buyer can not have paid the price
Where the buyer can not have accpeted the goods
Wherer conforming goods, whether or no accpeted have been lost or damaged wihing a commerically reasonable time after the risk of loss has passed
Where the seller has identified goods to the contrac and there is no reasonable preopect of reslelling them to a third party for a reasonable price
Seller must hold for the buyer the goods, and if the price is paid, the buyer is entitled.
If while the seller is holding the goods for the buyer, resle beomcse psoible, than the seller may resell and must deduct from its action for price the proceeds of any resale
Sellers for price can sue for incidental damges
Resale samges, if the buyer breachs, the seller identifies, notices give, and seller resells the goods at either a public or priact sale
Delay issue is still ripe
In some case, an immeadite suit, ratther than one immedaitely afterwards might still be ripe, if the seller is uable after reaosnbale effort to resell the goods at a reasonle price or the circumstances reasonable indicate that such an effort would be unavailing
Cancel the contract – cancelling apry aleways retain right to sue for breach
Lessor
Right to repossess gooods is a standard remedy
Specifically says that the lessor can sue on contractually agreed for remedies
Lessors’s price is unpaid rent plus the the present value of future rent
Once the lessor sue for the rent, i must hold the lease goods for the lessee for the reamining term of th lease
In the even of a release thhan the original lessee gets credit for the revenue
If the leasee pas judgment forther rent, it is entitled to possesion and use of the leased goods for the reaminder of the term
Kessir who sues for rent is eligible for incidental damages
Resale damage formula: (accrused but unpaid rent on the original lease as of the date of the new lease term) +( present value of the total remaining payment for the original lease date – present value of the total in the new lease for the term that is comparable t the reminder of the priginal lease) + incidental damages – expesnes saved
The second lease can be "substantially similar"
aggreived lessors can sue for los profits
lessors can sue for damages to the salvage value
damages under Convention on the International Sale of Goods (distinction between avoided breached contract and non avoided)
can only avoid withy a fundamental breach -- avoidenace relieves of dutues but retains right to sue
Convention on the International Sale of Goods treats the buyers "cover" and the "seller" resale about the same
Seller can get specific performance, bu subject to Uniform Commercial Code
Real estate
Somes states, depding on the terms of the contracts agallow the selelr to recover contracts-market damges but only when the seller can prove those damages( an dwhere the seller returns the deposit
Sellers are usualyl not entited to contracts-resael danages as such
Consequential: Might not be able to get damages for unforseeable damages
Usually for costs associated with resale
Can reverse rules about atty’s fees
Risk of loss (by 3rd parties)
Standard terms
FOB: Seller’s Place aka Shipment Contract (default)
Risk shifts when the goods are delivered to the carrier and the buyer is responsibelf ro paying the cost of fright
Must put the goods in possession of carrier
Make a reaosnbale KI for their transportion
Delivery any documetn necessary to enable buyer to take delivery
Promply notify buyer of shipment
FOB: Buyer’s Place aka destinartion contract
Risk shifts when the goods arrive at the buyer, and the seller is responsibel for paying the cost of the frigt
Put goods in possesion of carrier
Risk passes when buyer erevies a negotaibel docuemtn of title
When bailee acknowelddg to the buyer th ebuyer’s right to possess of the ogoods
When the buyer recives a non-negotaible document of title
Make a reaoble conract for transportion
Delivery any docuemnt necessary to enable the buyer to take delivery
Promprly notfiy the buyer of shipments
Ther ehas to be an actually injury for damages due to unreable conduct
If a buyer rightfully revokes acceptance, than the buyer can reate the risk of loss as if it rested on the seller from the beginning, but only to the extent of a deficity in the buyer’s insurance coverage
Default risk of loss rule for leases
Risk of loss never passes except for finance leases (otherwise the same)
Convention on the International Sale of Goods on risk of loss
Parities can opt out
13 incoterms
E (lowest level of respobibility for seller)
F (seller has at least the responsiblility of delivery the goods to the carrier, at which point the buyer will have the risk of loss)
INCO terms on page 194
Parities must specific Uniform Commercial Code or INCOTERMS
Default rules
Goods are to be delivered to the buyer but the goods are not in transit defaults to a Uniform Commercial Code shipment contracts
Goods already in transit – risk passes to buyer when contracts is conclued, but the risk may pass retroactively if the circumstances so indicate and if the sleler did not know or have reason to know that the goods were lsot or damged at the time the contract was conlcided
Under Convention on the International Sale of Goods if the buyer has committed a fundamental breach, thebuyer retains all remeides, including the right to avoid
Real estate risk of loss
Common law: risk of loss during the closing is on the buyer (could be based on seperation of title, and a change in the rol)
Insurance proceeds would need to be held in trust for the buyer
Early possession doesn’t change thigns
Closing
goods
Acceptance – rejection has to be rasonable time -- "perfect tender rule"
Affiramtive signifcation
Failure to reject
Act by buyer that is inconsitant with sellers’ onwership -- must state reason for rejection
Rights to cure creaee commerical leeway
Installment contracts
Buyer may only reject an installment if the nonconfimity impairs an insllment and can’t be cured
Revocation of acceptance
Non-conformity must subtantilly impari value of goods to buyer
Must do revoke reasonable after discover
Assurances might cause non-confirmity
Uniform Commercial Code isn’t clear on whehter the revoking buyer and the rejecting buyer have to give the same chance to cure -- most courts allow the seller to cure
Shaken faith doctine – that the nature of the product may be legitimately doctrine – e. g. seller can’t unilatelly define what constites an accetpabel cure
Keases
Finance lease can revoke accepntace of leased goods where the fiure to discover the nonconnformity was reasobaly induced by the leesor’s assurances - still have direct right agins t supplier
Convention on the International Sale of Goods
Can revoke based on fundamental breach or something being too late
Unconscionability
Uniform Commercial Code – Sales
Vagueness
Determined as a matter of law
Measured at time of contracting
Uniform Commercial Code - Leases
Accent is on procedural unconscionability in the forming of the contract
Attorneys fees can be included
Convention on the International Sale of Goods
CISG doesn't include consumers -- so there is no unconscionability
Common law real estate
Magnuson-Moss
Checks -- federal rules will pre-empt UCC
Person who writes the check is defined as the drawrer
"Drawee" or "payor bank" means a person ordered in a draft to make payment.
"drawn" – act of writing a check on an account
"Acceptor" means a drawee who has accepted a draft.
"Drawer" or "issuer" means a person who signs or is identified in a draft as a person ordering payment.
"depository bank" means the first bank to take an item even though it is also the payor bank, unless the item is presentefor immediate payment over the counter;
pre-accepted payment is a certified check
when a bank should pay
cashing: banks must pay immeadiate , over the counter chekcs
on-us (third party): midnight of the next business day (e. g. intratransfer)
.bank can charge-back , and can reallocate the funds. If the money was withdrawn the bank can sue to revoer
provisional settlement is the time at which the moneu is in the account but it can be cahrged back
a bank should pay when the customer has payment (by writing a check) -- all that has to happen is the bank has to property transfer the debt to the paying institution -- doesn't have to pay if it is stolen
if the customer ahs authorized if they wrote a check
as soon as the check is cashed or brought to the imtermediary, the intermediary is entiteled to encofrce
problems
overdrafts
at the payor banks option it can charge the account
at the payor bank’s option it can refuse to pay
banks can waive out of this by contractually ageeeing to pay overdrafts
fees
code doesn’t regulate
courts have looked at unconscionability at bad faith and at how mucgh the penalites exceeded the cost
stop-payment
with timely notices, the bank no longer has the right to pay
revering the charges for improper transaaction
bank is subrogated to the right of the payee of the check
bank can asser tht payee’s rights agins the drawer as a dfence to the bank’s obligation to recredit the account (e. g. bank steps into the shoes of the payee) – this might be practically quite limited
usaully banks shoiuld reverse
banks have to returnany fees in connection with transactions, if penalties result
wrongful dishonor: penalties include proximate damages
indorsements bring with them liability
people can indorse without recourse -- just to pass on
loss can be passed up the chanhain
transfer warranties (presentment warranties only run to the payor bank) – transfer warranties only run to ealier transferees in the chainof collection (these include forged drawer’s signature)
forgery: of not authorized, paur bears the loss – and payor bank can seek recover from the person to whom or for whose benefit the payment was mdade, unless it was taken in good faith and value
loss can be passed back to the earlierst possible person after the forgery -- payor bank shouldn’t have paid, but it can revoever, but it can’t recover from someone who took for goof faith and vlue
absent a valid indorsement by the payee, no one can become a person entitled to enforce a check
presenting bank that took a chekc from a forger would have breached its presentedment waranty to the payor bank
warranties of presentmetn and transfer
check this!
Negligence can pout a burden ofn people
Bank statement may play a part
Forger goes to the victim
warranties to sue on
can also sue for a breach of presentment warranty
requires actual knowledge, rather than notice
when the bank must pay
local
cash withdrawls from local chcks: first $100 on the first day, next $400 on the second day, and everything else on the third day
noncash withdraws fro local checks: bank must make $100 available on direst business day after the banky day on which the funds were deposited . Rest of the funds on second business day
nolocal
cash withdrawls from nonlocal checks: first $100 on first day, $400 on fith day, and the rest on the sixth
nocash withdraws from non-local checks: : bank has to make $100 on the firs tbusiness day, but it has until 5th business day to make the reatining funds vailable 12 cfr 229.12c
exceptions for new accounts, large deposits, faud
clearing
reg cc deadline for returning checks:
second business day for local
fourth for nonlocal
bank has to depsoit the check in the mail by midnight of day it receives the chekc
exceptions
midnight deadling waived as long as the payor delviers the check to the transfer by the first banking day after the deadline
can have an extra day if using a fast delviery service
notice of non-payment
must get notice of non-paument by 4pm on the second business day after the banking day on which the payor bank received the check
truncation – not in NY
federal reserve
msot expensive
slower
when deadline for dishonor pass, things are final
clearing houses: local checks
assumtion that things will be honored
commputaiton of ent position
clearing houses have a time by which things have to be declined
no Uniform Commercial Code requirement of decision to dishonor (e. g. the deadline is satisifed if the bank just puts the chek in the mail
direct-send (also correspondant bank relationships_)
wire transfers
CHIPS and generic
beneficiary bank can reject order, as the sending bank might e insolvent -- acceptance is final, and must pay the beneficiary
beneficiary’s bank acepts a payment order at the earlier of the folowing 1_ when the bank pays the beneficiary or when the bank notifies the beneficiary of recippt of the order that the account has been debeited
if something goes to the wrong arrount, due to error of the sender, it requries action in the local courts
most bodies of law rely on common law restitution
if the other (wrongfully debted) party has an independant right of payment
can be applied -- might be more complicated if there are restricted accoutns
if someone gains access to a password, the bank is responsible
doomsday provision
banks contribute share of the swhorfall
if two large participants fail,than the transactions gets unwound
Fedwire
Usually to the credit of a third party -- debt cards exluded under efta
Sender bank and a receiving bank
Originaating bank can collect from a depositer who didn’t have enough funds
Federal Reserve, when it receives the payment order, has no choice but to avoid pay, and the fed becomes obligated
Payment can be excused if the fed screes up
Banks have to cover any overdrafts by the end of the day -- check this
.15 fee for the amount of the overdraft, large overdrafts require regulatory supervision
debit provision -- takes a little while longer of the other bank is in a different fed district
no signficance to refusal provision of chips – the beficiary’s bank become sobligated to pay the amount of the fedwire transfer
fed seems to take the risk
probably very little reason to go to equity in the case of finality of payment
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