Holder in Due Course. Celine issues a ninety-day negotiable promissory note payable to the order of Hayden. The amount of the note is left blank, pending a determination of the amount that Hayden will need to purchase a used car for Celine. Celine authorizes any amount not to exceed $\$ 2,000$. Hayden, without authority, fills in the note in the amount of $\$ 5,000$ and thirty days later sells the note to First National Bank of Oklahoma for $\$ 4,850$. Hayden does not buy the car and leaves the state. First National Bank has no knowledge that the instrument was incomplete when issued or that Hayden had no authority to complete the instrument in the amount of $\$5,000$. (See Holder in Due Course.) (a) The first group will determine whether the bank qualifies as a holder in due course and, if so, for what amount. (b) The second group will decide what would have happened if Hayden had sold the note to a stranger in a bar for $500. Would the stranger qualify as a holder in due course? Explain.

Indorsements. A check drawn by Cullen for $\$ 500$ is made payable to the order of Jordan and issued to Jordan. Jordan owes his landlord $\$ 500$ in rent and transfers the check to his landlord with the following indorsement: "For rent paid, [signed] Jordan." Jordan's landlord has contracted to have Deborah do some landscaping on the property. When Deborah insists on immediate payment, the landlord transfers the check to Deborah without indorsement. Later, to pay for some palm trees purchased from Better-Garden Nursery, Deborah transfers the check with the following indorsement: "Pay to Better-Garden Nursery, without recourse, [signed] Deborah." Better-Garden Nursery sends the check to its bank indorsed "For deposit only, [signed] Better-Garden Nursery." (See Indorsements.)

(a) Classify each of these indorsements.

(b) Was the transfer from Jordan's landlord to Deborah, without indorsement, an assignment or a negotiation? Explain.

What evidence did the plaintiff offer to establish standing to enforce the note? Was this sufficient proof? Explain.

The Brown family owns several companies, including the J. H. Stevedoring Company and Penn Warehousing and Distribution, Inc. Many aspects of the companies' operations and management are intertwined. Dennis Bishop worked for J. H. and Penn for more than ten years before he became the financial controller at J. H. His responsibilities included approving invoices for payment and reconciling the corporate checkbook. In December of the following year, Bishop began stealing from Penn and J. H. by writing checks on the corporate accounts and using the funds for his own benefit (committing the crime of embezzlement). Several members of the Brown family signed the checks for Bishop without hesitation because he was a longtime, trusted employee. Over the next two years, Bishop embezzled more than $\$ 1.2$ million. He used $\$700,000$ to buy horses from the Fasig-Tipton Company and Fasig-Tipton Midlantic, Inc., with Penn and J. H. checks made payable to those firms. When Bishop's fraud was revealed, J. H. and Penn filed a suit in a federal district court against the Fasig-Tipton firms (the defendants) to recover the amounts of the checks made payable to them. Using the information presented in the chapter, answer the following questions.

What method was most likely used to negotiate the instruments described here?

Requirements for Negotiability. Peter Gowin was an employee of a granite countertop business owned by Joann Stathis. In November $2026$, Gowin signed a promissory note agreeing to pay $\$ 12,500$ to become a co-owner of the business. The note was dated January $15, 2026$-ten months before it was signed - and required Gowin to make installment payments starting in February $2026$. Stathis told Gowin not to worry about the note and never requested any payments. Gowin continued to work at the business until $2028$, when he quit, claiming that he owned half of the business. Stathis argued that Gowin was not a co-owner because he had never paid the $\$ 12,500$ into the business.

(a) The first group will argue in favor of Stathis that Gowin did not own any interest in the business because he had not paid the $\$ 12,500$.

(b) The second group will evaluate the strength of Gowin's argument. Gowin claimed that, because compliance with the stated dates was impossible, the note effectively did not state a date for its payment. It was thus a demand note under UCC $3-108$(a). Because no demand for payment had been made, Gowin's obligation to pay had not arisen, and the termination of his ownership interest in the granite business was improper.

(c) The third group will create a list with explanations and examples detailing under what circumstances oral statements by Stathis to Gowin can be enforced or can be used as a defense by Gowin.

Sabrina Runyan writes the following note on a sheet of paper: “I, the undersigned, do hereby acknowledge that I owe Leo Woo one thousand dollars, with interest, payable out of the proceeds of the sale of my horse, Lightning, next month. Payment is to be made on or before six months from date.” Discuss specifically why this is not a negotiable instrument. (See Types of Negotiable Instruments.)

Kodiak agrees to sell one thousand espresso machines to Lin to be delivered on May

1. Due to a strike during the last week of April, there is a temporary shortage of delivery vehicles. Kodiak can deliver the espresso makers two hundred at a time over a period of ten days, with the First delivery on May 1. (See Obligations of the Buyer or Lessee.)

(a) The first group will determine if Kodiak has the right to deliver the goods in five lots. What happens if Lin objects to delivery in lots?

A trader sells a strangle by selling a 6-month European call option with a strike price of $50 for$3 and selling a 6-month European put option with a strike price of $40 for$4. For what range of prices of the underlying asset in 6 months does the trader make a profit?

Guy Holcomb owns and operates Oasis Goodtime Emporium, an adult entertainment establishment. Holcomb wanted to create an adult Internet system for Oasis that would offer customers adult-theme videos and "live" chat room programs using performers at the club. On May $10$, Holcomb signed a work order authorizing Thomas Consulting Group (TCG) "to deliver a working prototype of a customer chat system, demonstrating the integration of live video and chatting in a Web browser." In exchange for creating the prototype, Holcomb agreed to pay TCG $\$64,697$. On May $20$, Holcomb signed an additional work order in the amount of $\$ 12,943$ for TCG to install a customized firewall system. The work orders stated that Holcomb would make monthly installment payments to TCG, and both parties expected the work would be finished by September.

Due to unforeseen problems largely attributable to system configuration and software incompatibility, the project required more time than anticipated. By the end of the summer, the website was still not ready, and Holcomb had fallen behind in his payments to TCG. TCG threatened to cease work and file a suit for breach of contract unless the bill was paid. Rather than make further payments, Holcomb wanted to abandon the project. Using the information presented in the chapter, answer the following questions.

Did the parties have a valid contract under the UCC? Were any terms left open in the contract? If so, which terms? How would a court deal with open terms?

Guy Holcomb owns and operates Oasis Goodtime Emporium, an adult entertainment establishment. Holcomb wanted to create an adult Internet system for Oasis that would offer customers adult-theme videos and "live" chat room programs using performers at the club. On May $10$, Holcomb signed a work order authorizing Thomas Consulting Group (TCG) "to deliver a working prototype of a customer chat system, demonstrating the integration of live video and chatting in a Web browser." In exchange for creating the prototype, Holcomb agreed to pay TCG $\$64,697$. On May $20$, Holcomb signed an additional work order in the amount of $\$ 12,943$ for TCG to install a customized firewall system. The work orders stated that Holcomb would make monthly installment payments to TCG, and both parties expected the work would be finished by September.

Due to unforeseen problems largely attributable to system configuration and software incompatibility, the project required more time than anticipated. By the end of the summer, the website was still not ready, and Holcomb had fallen behind in his payments to TCG. TCG threatened to cease work and file a suit for breach of contract unless the bill was paid. Rather than make further payments, Holcomb wanted to abandon the project. Using the information presented in the chapter, answer the following questions.

Suppose that Holcomb and TCG meet in October in an attempt to resolve their problems. At that time, the parties reach an oral agreement that TCG will continue to work without demanding full payment of the past due amounts and Holcomb will pay TCG $\$ 5,000$ per week. Assuming the contract falls under the UCC, is the oral agreement enforceable? Why or why not?

Kodiak agrees to sell one thousand espresso machines to Lin to be delivered on May

1. Due to a strike during the last week of April, there is a temporary shortage of delivery vehicles. Kodiak can deliver the espresso makers two hundred at a time over a period of ten days, with the First delivery on May 1. (See Obligations of the Buyer or Lessee.)

(b) A second group will analyze whether the doctrine of commercial impracticability applies to this scenario and, if it does, what the result will be.

Performance Obligations. Kodiak agrees to sell one thousand espresso machines to Lin to be delivered on May $1$. Due to a strike during the last week of April, there is a temporary shortage of delivery vehicles. Kodiak can deliver the espresso makers two hundred at a time over a period of ten days, with the first delivery on May $1$.

(a) The first group will determine if Kodiak has the right to deliver the goods in five lots. What happens if Lin objects to delivery in lots?

(b) A second group will consider whether Kodiak has a duty to arrange for a substitute carrier. Discuss what this entails.

(c) A third group will analyze whether the doctrine of commercial impracticability applies to this scenario and, if it does, what the result will be.

Nancy Mahar was the office manager at Golden Years Nursing Home, Inc. She was given a signature stamp to issue checks to the nursing home's employees for up to $\$ 500$ as advances on their pay. The checks were drawn on Golden Years' account at First National Bank. Over a seven-year period, Mahar wrote a number of checks to employees exclusively for the purpose of embezzling funds for herself. She forged the employees' indorsements on the checks, signed her name as a second indorser, and deposited the checks in her personal account at Star Bank. The employees whose names were on the checks never actually requested them. When the scheme was uncovered, Golden Years filed a suit against Mahar, Star Bank, and others to recover the funds. Using the information presented in the chapter, answer the following questions.

Under the UCC, which party, Golden Years or Star Bank, must bear the loss in this situation? Why?

Service of Process. Dr. Kevin Bardwell owns Northfield Urgent Care, LLC, a Minnesota medical clinic. Northfield ordered flu vaccine from Clint Pharmaceuticals, a licensed distributer of flu vaccine located in Tennessee. The parties signed a credit agreement that specified that any disputes would be litigated in the Tennessee state courts. When Northfield failed to pay what it owed for the vaccine, Clint Pharmaceuticals filed a lawsuit in Tennessee and served process on the clinic via registered mail to Dr. Bardwell, the registered agent of Northfield.

Bardwell's wife, who worked as a receptionist at the clinic and handled inquiries on the clinic's Facebook site, signed for the letter. Bardwell did not appear on the trial date, however, and the Tennessee court entered a default judgment against Northfield. When Clint Pharmaceuticals attempted to collect on the judgment in Minnesota, Bardwell claimed that the judgment was unenforceable. He asserted that he had not been properly served because his wife was not a registered agent. Should the Minnesota court invalidate the Tennessee judgment? Was service of process proper, given that the notice was mailed to the defendant medical clinic and the wife of the physician who owned the clinic opened the letter? Explain. [Clint Pharmaceuticals v. Northfield Urgent Care, LLC, $2012$ WL $3792546$ (Minn.App. $2012$).] (See Pretrial Procedures.)