Author Question: The term security has a legal meaning that includes only stock, bonds and debentures. a. True b. ... (Read 126 times)

tsand2 · **on:** Jun 24, 2018

The term security has a legal meaning that includes only stock, bonds and debentures.
a. True
b. False
Indicate whether the statement is true or false

Question 2

Check Collection. Robert Santoro was the manager of City Check Cashing, Inc, a check-cashing service in New Jersey, and Peggyann Slansky was the clerk. On July 14, Misir Koci presented Santoro with a 290,000 check signed by Melvin Green and drawn on Manufacturers Hanover Trust Co (a bank). The check was stamped with a Manufacturers certification stamp. The date on the check had clearly been changed from August 8 to July 7. Slansky called the bank to verify the check and was told that the serial number did not sound like one belonging to the bank. Slansky faxed the check to the bank with a query about the date, but received no reply. Slansky also called Green, who stated that the date on the check was altered before it was certified. Check Cashing cashed and deposited the check within two hours. The drawee bank found the check to be invalid and timely returned it unpaid. Check Cashing filed a suit in a New Jersey state court against Manufacturers and others, asserting that the bank should have responded to the fax before the midnight deadline in UCC 4-302 . Did the bank violate the midnight-deadline rule? Explain.

Joc · **Reply #1 on:** Jun 24, 2018

Answer to Question 1

FALSE

Answer to Question 2

Check collection
The court issued a summary judgment in favor of the bank. Check Cashing appealed to a state intermediate appellate court, which reversed and remanded for a trial on the issue of both par-ties' negligence. The bank appealed to the state supreme court, which reinstated the summary judgment. The court explained that n the absence of a specific agreement or undertaking by the Bank, or a contact' clearly implying that the Bank would respond within a specified period of time earlier than permitted by the Code's midnight deadline, no duty can be said to have arisen. Here, Check Cashing was a non-customer that placed an unsolicited call to a customer service line to verify whether a check in its possession was good. That set of facts established no special relationship based upon an agreement whereby the Bank contracted to respond prior to the U.C.C. midnight deadline. There was an undertaking by the bank employee, to whom Slansky talked, to answer Slansky's inquiry, but the critical undertakingthat she would respond prior to the midnight deadlinewas lacking. The contact between the bank employee and Slansky never indicated that the employee would respond within a definite time, that she would only respond if there was a problem with the certification, or that if she did not respond, Check Cashing should feel free to negotiate the check. The court added that the legislative choice of a fixed deadline is significant because it produces the commercial certainty that the free flow of commerce demands.