Question: First Interstate Bank issued a letter of

> Klinicki and Lundgren incorporated Berlinair, Inc., a closely held Oregon corporation. Lundgren was president and responsible for developing business. Klinicki served as vice president and director responsible for operations and maintenance. Klinicki own

> Anthony Yee was the president of Waipahu Auto Exchange, a corporation. As part of his corporate duties, he arranged financing for the company. Federal Services Finance Corp. drew 12 checks payable to the order of Waipahu Auto Exchange. These were then in

> Hamway and other minority shareholders brought an action against majority shareholders of Libbie Rehabilitation Center, Inc., including Frank Giannotti, CEO-director; Alex Grossman, president- director; Henry Miller, vice president-director; Ernest Dervi

> Getty Petroleum distributes gasoline through dealer- owned stations. Customers who buy gas at a Getty station can pay by cash or credit card. When a customer uses a credit card, Getty processes the trans- actions, receives payment from the credit card co

> A director of a corporation cannot lend money to the corporation because that would create the danger of a conflict of interest between the director ’ s status as a director and as a creditor. Appraise this statement.

> Danny Hill, the general manager of Southeastern Floor Covering Co., Inc. (SE), had full authority to run the business. His responsibilities included pre- paring and submitting bid proposals to general contractors for floor coverings and ceilings on const

> High-Tech Collieries borrowed money from Holland. High-Tech later refused to be bound by the loan contract, claiming the contract was not binding because it had been obtained by duress. The evidence showed that the offer to make the loan was made on a ta

> Douglas Hansen, Leo Borrell, and Bobby Lawrence were three psychiatrists who recognized the need for an inpatient treatment facility for adolescents and children in their community. They became limited partners in building a for-profit psychiatric facili

> Sippy was thinking of buying Christich ’ s house. He noticed watermarks on the ceiling, but the agent showing the house stated that the roof had been repaired and was in good condition. Sippy was not told that the roof still leaked and that the repairs h

> On October 22, 2001, Benjamin Ritchie executed a promissory note and mortgage in consideration for a $47,000 loan from WaMu. The mortgage covered both real estate located at 1790 Mount Mariah Road, Carlisle, Kentucky, and a manufactured home to be situat

> Kimbrell ’ s Furniture Co. sold a new television set and tape player to Charlie O ’ Neil and his wife. Each purchase was on credit, and in each instance, a security agreement was executed. Later on the same day of purchase, O ’ Neil carried the items to

> Kim purchased on credit a $1,000 freezer from Silas Household Appliance Store. After she had paid approximately $700, Kim missed the next monthly installment payment. Silas repossessed the freezer and billed Kim for the balance of the purchase price, $30

> Rawlings purchased a typewriter from Kroll Type- writer Co. for $600. At the time of the purchase, he made an initial payment of $75 and agreed to pay the balance in monthly installments. A security agreement that complied with the UCC was pre- pared, bu

> When Johnson Hardware Shop borrowed $20,000 from First Bank, it used its inventory as collateral for the loan. First Bank perfected its security interest by filing a financing statement. The inventory was subsequently damaged by fire. Flanders Insurance

> Edward Johnson III, the CEO and principal owner of the world’s largest mutual fund company, Fidelity Investments, Inc., was a longtime tennis buddy of Richard Larson. In 1995, Johnson asked Larson, who had construction experience, to supervise the constr

> A consumer made a purchase on a credit card. The card issuer refused to accept the charge, and an attorney then sued the consumer for the amount due. In the complaint filed in the lawsuit, the attorney wrongly stated that interest was owed at 18 percent

> Richard Grassgreen was executive vice president and then president and chief operating officer of Kinder- Care, Inc., the largest proprietary provider of child care in the country. The company was restructured in 1989 and changed its name to the Enstar G

> The town of Newport obtained a corporate MasterCard that was given to the town clerk for purchasing fuel for the town hall. The town clerk used the card for personal restaurant, hotel, and gift shop debts. The town refused to pay the card charges on the

> In December 2008, Corey and Jamie Baker purchased a TV from Best Buy as well as a four-year service contract for the TV. In November 2010, Best Buy determined that the problems the Bakers were having with the TV could not be fixed, so Best Buy replaced t

> Blubaugh was a district manager of Schlumberger Well Services. Turner was an executive employee of Schlumberger. Blubaugh was told that he would be fired unless he chose to resign. He was also told that if he would resign and release the company and its

> International Yogurt Co. (IYC) developed a unique mix for making frozen yogurt and related products. Morris and his wife purchased a franchise from the company but were not told that a franchise was not a requirement for obtaining the mix — that the comp

> On October 14, 1980, United American Bank of Knoxville made a $1,700,000 loan to Frederic B. Ingram. William F. Earthman, the president of the bank and a beneficiary of the loan, had arranged for the loan and prepared the loan documents. Mr. Ingram and M

> On May 16, 2003, Sari Smith filed a class-action lawsuit in Cook County, Illinois, against J.M. Smucker Co. on behalf of “ [a]ll purchasers in the United States of America of spreadable fruit products labeled ‘ Simply 100% Fruit ’ manufactured, produced,

> Thomas was sent a credit card through the mail by a company that had taken his name and address from the telephone book. Because he never requested the card, Thomas left the card lying on his desk. A thief stole the card and used it to purchase merchandi

> Sharolyn Charles wrote a check for $17.93 to a Poncho ’ s Restaurant on July 4, 1996, as payment for a meal she had there. The check was returned for insufficient funds. Poncho ’ s forwarded the check to Check Rite for collection. On July 19, Check Rite

> Colgate-Palmolive Co. ran a television commercial to show that its shaving cream, Rapid Shave, could soften even the toughness of sandpaper. The commercial showed what was described as the sandpaper test. Actually, what was used was a sheet of Plexiglas

> The San Antonio Retail Merchants Association (SARMA) was a credit reporting agency. It was asked by one of its members to furnish information on William Douglas Thompson III. It supplied information from a file that contained data on William III and on W

> Classify each of the following activities as proper or prohibited under the various consumer statutes you have studied. a. Calling a hospital room to talk to a debtor who is a patient there. b. Calling a hospital room to sell surgical stockings. c. Rol

> Discuss the power of a corporation ’ s president to employ a sales manager and to agree that the man- ager should be paid a stated amount per year plus a percentage of any increase in the dollar volume of sales that might take place.

> A made a contract to construct a house for B. Subsequently, B sued A for breach of contract. A raised the defense that the contract was not binding because it was not sealed. Is this a valid defense? [ Cooper v. G. E. Construction Co., 158 S.E.2d 305 (Ga

> Willingham proposed to obtain an investment property for the Tschiras at a “fair market price,” lease it back from them, and pay the Tschiras a guaranteed return through a management contract. Using a shell corporation, The Wellingham Group bought a comm

> Parente, Randolph, Orlando & Associates (Parente) is an accounting firm that had done auditing work for Sparkomatic for nearly 20 years. On June 14, 1993, Sparkomatic entered into a Memorandum of Intent with Williams Controls to sell Williams assets from

> List three areas in consumer credit cards affected by the CARD Act.

> Alpha University has an arrangement with Axis Credit Card Company to collect 1 percent on all credit card charges made by students who obtain their cards through booths on the Alpha campus. Do any consumer protection statutes apply to this relationship?

> Stevens purchased a pair of softball shoes manufactured by Hyde Athletic Industries. Because of a defect in the shoes, she fell and broke an ankle. She sued Hyde under the state consumer protection act, which provided that “ any person who is injured in

> Charter Bank of Gainesville had in its possession a note containing the following provision: “ This note with interest is secured by a mortgage on real estate, of even date herewith, made by the maker hereof in favor of said payee ... . The terms of said

> Jack Smith was required by his bank to obtain two sureties for his line of credit of $100,000. Ellen Weiss has agreed to act as a surety for $50,000, and Allen Fox has agreed to act as a surety for $75,000. Smith has used the full $100,000 in the line of

> Hugill agreed to deliver shingles to W. I. Carpenter Lumber Co. and furnished a surety bond to secure the faithful performance of the contract on his part. After a breach of the contract by Hugill, the lumber company brought an action to recover its loss

> Ribaldgo Argo Consultores entered into a contract with R. M. Wade & Co. for the purchase of irrigation equipment. Ribaldgo obtained a letter of credit from Banco General, a bank with its principal place of business in Quito, Ecuador. The letter of credit

> UPS Capital Business Credit agreed to loan Ashford International, Inc, an American company based in Atlanta, Georgia, for the sale of computers to the Ministry of Education in Jordan. Ashford was required to obtain a letter of credit from United Californ

> Tri County Truck & Diesel borrowed $165,000 from Security State Bank and pledged its inventory as security for the loan. In addition, Fred and Randelle Burk agreed to act as sureties for the loan. Tri County defaulted on the loan and Security Bank reposs

> Larry G. Snodgrass and Mark Swinnea owned equal interests in two business entities, ERI Consulting Engineers, Inc. (ERI), and Malmeba Company, Ltd., which they operated together for approximately 10 years. ERI manages asbestos abatement projects for cont

> James Fitl purchased a 1952 Mickey Mantle Topps baseball card from baseball card dealer Mark Strek for $17,750 and placed it in a safe deposit box. Two years later, he had the card appraised, and he was told that the card had been refinished and trimmed,

> Crown Corporation has borrowed $16,000,000 from Third Bank. Third Bank required four sureties for the loan. The sureties are as follows: Andover…………$4,000,0000 Busch ……………..$8,000,0000 Chapman…………$2,000,0000 Davidson ………….$2,000,0000 Crown has defaulted

> Fern Schimke ’ s husband, Norbert, was obligated on two promissory notes in favor of Union National Bank. Some time prior to his death, Union National Bank prepared a guaranty contract that was given to Norbert for his wife to sign. She signed the guaran

> Beck was the general manager of Chilkoot Lumber Co. Haines sold fuel to the company. To persuade Haines to sell on credit, Beck signed a paper by which he promised to pay any debt the lumber company owed Haines. He signed this paper with his name followe

> On August 1, 1987, Dori Leeds signed a “ guarantee of credit ” with Sun Control Systems, which guaran- teed “ the prompt payment, when due, of every claim of [Sun Control Systems] against [Dori Leeds dba ‘ Blind Ambitions ’ ]. ” At the time she signed th

> LaBarge Pipe & Steel Company agreed to sell PVF $143,613.40 of 30-inch pipe provided that PVF obtain a letter of credit for $144,000, with the letter of credit entitling LaBarge to payment if PVF did not pay for the pipe within 30 days of invoice. PVF ob

> Abby Novel signed a note with the following on it: “ Glen Gallwitz 1-8-2002 loaned me $5,000 at 6% interest a total of $10,000.00. ” The note did not contain a payment schedule or a time for repayment. Abby used the $10,000 as start-up money for her busi

> Industrial Mechanical had a contract with Free Flow Cooling, Ltd., a British company. Free Flow owed Industrial $171,974.44 for work Industrial had per- formed on a construction project in Texas. Free Flow did not pay Industrial, and Industrial filed sui

> First National Bank hired Longdon as a secretary and obtained a surety bond from Belton covering the bank against losses up to $100,000 resulting from Longdon ’ s improper conduct in the performance of his duties. Both Longdon and the bank signed the app

> Paul owed Charles a $1,000 debt due September 1. On August 15, George, for consideration, orally promised Charles to pay the debt if Paul did not. On September 1, Paul did not pay, so Charles demanded $1,000 from George. Is George liable? Why or why not?

> Aldrich and Co. sold goods to Donovan on credit. The amount owed grew steadily, and finally Aldrich refused to sell any more to Donovan unless Donovan signed a promissory note for the amount due. Donovan did not want to but signed the note because he had

> Christy Pontiac, a corporation, was indicted for theft by swindle and forgery involving a GM cash rebate program. Hesli, a middle-management employee of Christy Pontiac, had forged the cash rebate applications for two cars so that the rebate money was pa

> Donaldson sold plumbing supplies. The St. Paul- Mercury Indemnity Co., as surety for him, executed and delivered a bond to the state of California for the payment of all sales taxes. Donaldson failed to pay, and the surety paid the taxes that he owed and

> In May 1989, Alma Equities Corp., owned by its sole shareholder and president, Lewis Futterman, purchased a hotel and restaurant in Vail, Colorado, from Alien for $3,900,000. Alma paid $600,000 in cash to Alien, and Alien provided a purchase money loan t

> Ann Weldon maintained an account at Trust Company Bank. James Weldon, her son and a garment broker, purchased textile goods from Sportswear Services for resale to another corporation known as Thicket Textiles. Sportswear demanded certified funds from Jam

> Arthur Odgers died, and his widow, Elizabeth Odgers (Elizabeth Salsman by remarriage), retained Breslow as the attorney for her husband ’ s estate. She received a check payable to her drawn on First National City Bank. Breslow told her to deposit it in h

> The Jordan Keys law firm represented the Greater Southeast Community Hospital of Washington, D.C., in a medical malpractice suit against the hospital. The hospital was self-insured for the first $1,000,000 of liability and the St. Paul Insurance Co. prov

> Adam Paul Strege (APS) opened a checking account at U.S. Bank. Just below his signature card for the account, he wrote, “ Call if I bounce a check. ” APS bounced several checks, and each time U.S. Bank covered those checks but it did not notify APS of th

> Harold H. Heidingsfelder signed a credit agreement as vice president of J. O. H. Construction Co. for a line of credit with Pelican Plumbing Co. The credit agreement contained the following language: In consideration of an open account privilege, I hereb

> William Elias was the former owner of Direct Lending, a subprime mortgage company purchased by EA Management. Sometime after the sale, Elias went to Chase Bank and had three cashier ’ s checks drawn to third parties and payable out of Direct Lending acco

> Hixson paid Galyen Petroleum Co. money he owed by issuing three checks to Galyen. The bank refused to cash the three checks because of insufficient funds in the Hixson account to pay all three. Galyen sued the bank. What was the result? Why? [ Galyen Pet

> James Horne ’ s will provides that his estate is to be distributed to his heirs per capita . Upon his death, two of his three children are surviving and his deceased child left two children (James ’ s grandchildren). His will provides that all his proper

> Scott D. Leibling gave his bank, Mellon Bank, an oral stop payment order. Nineteen months later, the check emerged and Mellon Bank honored it. Lei- bling has filed suit against Mellon Bank for acting unreasonably under the circumstances. Is Mellon Bank l

> Larry Phillips was hired for a two-year period as executive secretary of the Montana Education Association (MEA). Six months later, he was fired. He then sued MEA for breach of contract and sued the directors and some of the other employees of MEA on the

> Norris, who was ill in the hospital, was visited by his sister during his last days. Norris was very fond of his sister and wrote a check to her that she deposited in her bank account. Before the check cleared, Norris died. Could the sister collect on th

> Bogash drew a check on National Safety Bank and Trust Co. payable to the order of Fiss Corp. At the request of Fiss Corp., the bank certified the check. The bank later refused to make payment on the check because of a dispute between Bogash and the corpo

> John G. Vowell and his wife, now deceased, had a checking account and a savings/money-market account with Mercantile Bank of Arkansas. In June 1997, Dr. Vowell and his wife allowed their daughter, Suzan Vowell, now also deceased, and her boy- friend to

> Dean bought a car from Cannon. As payment, Dean gave him a check drawn on South Dorchester Bank of Eastern Shore Trust Co. Cannon cashed the check at the Cambridge Bank of Eastern Shore Trust Co. The drawee bank refused payment when the check was present

> Stock Solution is a “stock photo agency” that leases photographic transparencies produced by professional photographers for use in media advertising. Between October 1, 1994, and May 31, 1995, Stock Solution delivered Axiom 107 color transparencies to be

> Gloria maintains a checking account at First Bank. On the third day of January, the bank sent her a statement of her account for December accompanied by the checks that the bank had paid. One of the checks had her forged signature, which Gloria dis- cove

> Elmore purchased a car from Doenges Brothers Ford. The car had been placed with the dealership by a dealership employee as part of a consignment arrangement. Elmore was unable to obtain title to the car because the Environmental Protection Agency had iss

> McInnis purchased a tractor and scraper as new equipment of the current model year from Western Tractor & Equipment Co. The written contract stated that the seller disclaimed all warranties and that no warranties existed except those stated in the contra

> Valerie and Flora are the beneficiaries of a trust left to them by their mother upon her death. Their mother named Art Casanelli, a family friend, as the trustee. Flora has seen Art driving a new car and has learned that he just purchased a new and rathe

> Mrs. Kirby purchased a wheelchair from NMC/ Continue Care. The wheelchair was customized for her and her home. When the wheelchair arrived, it was too wide to fit through the doorways in her home. What options does Mrs. Kirby have? [ Kirby v. NMC Continu

> Sonya Kaminski purchased from Billy Cain ’ s Cornelia dealership a truck that was represented to her to be a 1989 Chevrolet Silverado pickup. However, subsequent incidents involving repair of the truck and its parts, as well as a title history, revealed

> In 1996, Congress offered national banks the opportunity to become Subchapter S entities. Amboy Bancorporation was a small, highly profitable New Jersey Bank that was overcapitalized. Amboy ’ s president and CEO utilized Bank Advisory Group, Inc. (BAG),

> Brown Machine Company, a division of Kvaerner U.S., Inc., entered into a contract to supply a machine and tools to Hakim Plast, a food container – producing company based in Cairo, Egypt, to enable Hakim to meet its growing demand for plastic containers.

> U.S. Steel Corp. formed Orinoco Mining Co., a wholly owned corporation, to mine large deposits of iron ore that U.S. Steel had discovered in Venezuela. Orinoco, which was incorporated in Delaware, was subject to Venezuela’s maximum tax of 50 percent on n

> Emily Lieberman and Amy Altomondo were mem- bers of the Alpha Chi Omega (AXO) sorority at Bowling Green State University. They negotiated with Johnathan James Furlong for the purchase of custom-designed sweaters for themselves and their sorority sisters

> Soon after Gast purchased a used auto from a Chevrolet dealer, he experienced a series of mechanical problems with the car. Gast refused to make further payments on the bank note that had financed the purchase. The bank took possession of the automobile

> Firwood Manufacturing Co. had a contract to sell General Tire 55 Model 1225 postcure inflators (PCIs). PCIs are $30,000 machines used by General Tire in its manufacturing process. The contract was entered into in 1989, and by April 1990 General Tire had

> Joseph Perna purchased a 1981 Oldsmobile at a traffic auction conducted by Locascio. The car had been seized pursuant to action taken by the New York City Parking Violation Bureau against Jose Cruz. Perna purchased the car for $1,800 plus tax and towing

> GRAS is a Michigan corporation engaged in the business of buying and selling cars. Between 1997 and 2000, Katrina Stewart was employed as a man- ager by GRAS. During that period, Stewart wrote checks, without authority, on GRAS ’ s corporate account paya

> Cronin, an employee of Epicycle, cashed his final paycheck at Money Mart Check Cashing Center. Epicycle had issued a stop payment order on the check. Money Mart deposited the check through normal banking channels. The check was returned to Money Mart mar

> Stephan ’ s Machine & Tool, Inc., purchased a boring mill from D&H Machinery Consultants. The mill was a specialized type of equipment and was essential to the operation of Stephan ’ s plant. The purchase price was $96,000, and Stephan ’ s had to borrow

> Ramtreat Metal Technology provided for a “double your money back” remedy in its contracts for the sale of its metal drilling assemblies. A buyer filed suit seeking consequential damages and cost of replacement. Ramtreat said that its clause was a limitat

> Wolosin purchased a vegetable and dairy refrigerator case from Evans Manufacturing Corp. When Evans sued Wolosin for the purchase price, Wolosin claimed damages for breach of warranty. The sales contract provided that Evans would replace defective parts

> Shareholders of Bear Stearns sued the directors of the corporation for damages for violation of the directors ’ fiduciary duties in effecting a stock-for-stock merger with J.P. Morgan Chase for an implied value of $10 per share while the company ’ s stoc

> McNeely entered into a contract with Wagner to pay $250,000 as a lump sum for all timber present in a given area that Wagner would remove for McNeely. The contract estimated that the volume in the area would be 780,000 board feet. Wagner also had provisi

> Formetal Engineering submitted to Presto a sample and specifications for precut polyurethane pads to be used in making air-conditioning units. Formetal paid for the goods as soon as they were delivered but subsequently discovered that the pads did not co

> Catherine Joseph, who does business as Metro Classics, sold clothing to Jackson Hole Traders, a corporation owned by David and Elizabeth Speaks. Jackson Hole Traders is located in Jackson, Wyoming, and sells clothing for men and women through a retail

> Marc Rich & Co., A.G., a Swiss commodities trading corporation, refused to comply with a grand jury subpoena requesting certain business records maintained in Switzerland and relating to crude oil transactions and possible violations of U.S. income tax l

> Harry Ulmas made a contract to buy a new car from Acey Oldsmobile. He was allowed to keep his old car until the new car was delivered. The sales contract gave him a trade-in value of $650 on the old car but specified that the car would be reappraised whe

> Trefalcon (a commercial arm of the government of Ghana) entered into a contract with Supply Com- mission as a purchaser of residual fuel oil (RFO). Supply Commission agreed, among other things, to supply Trefalcon with RFO at competitive prices as reserv

> The text of a handwritten note stated simply that “‘ I Robert Harrison owe Peter Jacob $25,000 ... , ’ /s/ Robert Harrison. ” Peter Jacob sought to use the handwritten note as a negotiable promissory note. Can he? [Jacob v. Harrison , 49 U.C.C. Rep. Serv

> Mark Murray and Ian Peck are art dealers who own separate art galleries located in New York. Robert and Jean Weil reside in Montgomery, Alabama, and are art collectors. Murray and Sam Lehr, a business acquaintance of his, traveled to Montgomery to see th

> Compare an implied contract with a quasi-contract.

> National Computers, Inc., a U.S. firm, entered into a joint venture with a Chinese computer manufacturing organization, TEC. A dispute arose over payments due the U.S. firm under the joint venture agreement with TEC. The agreement called for disputes to