Question

The Uniform Commercial Code: Negotiable Instruments and Secured Transactions

Marvin Mower (MM) is a college student trying to earn a few extra bucks. Marvin mows yards on the side, and he cuts the lawn for Ursula Unhappy (UU). UU writes MM a document for his work. The document acknowledges MM performed work, and that UU owed MM $50. MM doesn’t have time to get to the bank, so MM gives the document to Tommy Thirdparty (TT), who pays him $40 for it. Predictably, before TT can try to recover $50, UU is unhappy with MM’s work, and refuses to pay TT. Keeping your “eye on the ball” (limiting your post to this week’s material), discuss all the possible rights and responsibilities these three have to each other concerning the check and the yard.

Answer 1

The original contracting parties are Marvin Mower (MM) and Ursula Unhappy (UU). Since UU has written a document for his work which acknowledges MM has performed work and that UU owes MM $50. This amounts to a promisory note or a negotiable instrument. Further, there is a contract as all three key conditions to a contract are fulfilled - offer, acceptance and consideration. Under the Uniform Commercial Code (UCC), a negotiable instrument or a promisory note which is a secured transaction to pay on demand or at a future agreed date is legally binding and thus, UU is obligated to pay MM $50. Here in this case, MM assigns the negotiable instrument to TT for a consideration of $40. In such a case, TT now owns the negotiable instrument as the ownership right has been transferred to TT by MM, and TT is now entitled to receive payment from UU for $50 as TT is the owner of the negotiable instrument. The transaction between MM and TT is irrelevant to UU and what is the only consideration is the amount of $50 owed by UU to the owner/bearer of the negotiable instrument/promisory note. Further, if UU was unhappy with MM's work, she should have informed MM immediately upon completion of his work and not later to Tommy Thirdparty (TT), thus showing UU's intentions as bad and her strategy is to make an excuse to avoid payment to TT. Thus, under the provisions of the The Uniform Commercial Code (UCC): Negotiable Instruments and Secured Transactions, UU owes $50 to its new assigned owner TT and TT can initiate legal action against UU for not paying him.