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.

What is the rule set forth by that provision?

With regard to signature liability, which provision of the Uniform Commercial Code (UCC) discussed in this chapter applies to this scenario?

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.

With regard to signature liability, which provision of the Uniform Commercial Code (UCC) discussed in this chapter applies to this scenario?

Michael Scotto borrowed $\$2,970$ from Cindy Vinueza. Both of their signatures appeared at the bottom of a note. The note stated, “I Michael Scotto owe Cindy Vinueza $\$2,970$ (two thousand and nine-hundred & seventy dollars) & agree to pay her back in full. Signed on this 26th day of September 2009.” More than a year later, Vinueza filed a suit against Scotto to recover on the note. Scotto admitted that he had borrowed the funds, but he contended—without proof—that he had paid Vinueza in full. Is this note negotiable? Which party is likely to prevail? Why? [Vinueza v. Scotto, 30 Misc.3d 1229, 924 N.Y.S.2d 312 (1 Dist. 2011)] (See Requirements for Negotiability.)

Negotiability. Michael Scotto borrowed $\$2,970$ from Cindy Vinueza. Both of their signatures appeared at the bottom of a note. The note stated, "I Michael Scotto owe Cindy Vinueza $\$2,970$ (two thousand and nine-hundred & seventy dollars) & agree to pay her back in full. Signed on this $26$th day of September $2009$." More than a year later, Vinueza filed a suit against Scotto to recover on the note. Scotto admitted that he had borrowed the funds, but he contended-without proof-that he had paid Vinueza in full. Is this note negotiable? Which party is likely to prevail? Why?

Michael Scotto borrowed $2,970$ dollars from Cindy Vinueza. Both of their signatures appeared at the bottom of a note that stated, "I Michael Scotto owe Cindy Vinueza $2,970$ dollars (two thousand and nine-hundred & seventy dollars) & agree to pay her back in full. Signed on this $26$th day of September $2009$." More than a year later, Vinueza filed a suit against Scotto to recover on the note. Scotto admitted that he had borrowed the funds, but he contended-without proof-that he had paid Vinueza in full. Is this note negotiable? Which party is likely to prevail? Why?

Negotiability. Juan Sanchez writes the following note on the back of an envelope: "I, Juan Sanchez, promise to pay Kathy Martin or bearer $\$ 500$ on demand." Is this a negotiable instrument? Discuss fully.

Negotiable Instruments. 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.

Based on these facts, describe any transfer or presentment warranties that Mahar may have violated.

Robert Durbin, a student, borrowed funds from a bank for his education and signed a promissory note for their repayment. The bank lent the funds under a federal program designed to assist students at postsecondary institutions. Under this program, repayment ordinarily begins nine to twelve months after the student borrower fails to carry at least onehalf of the normal full-time course load at his or her school. The federal government guarantees that the note will be fully repaid. If the student defaults on the repayment, the lender presents the current balance-principal, interest, and costs-to the government. When the government pays the balance, it becomes the lender, and the borrower owes the government directly. Durbin defaulted on his note, and the government paid the lender the balance due and took possession of the note. Durbin then refused to pay the government, claiming that the government was not the holder of the note. The government filed a suit in a federal district court against Durbin to collect the amount due. Using the information presented in the chapter, answer the question.

Suppose that the note did not state a specific interest rate but instead referred to a statute that established the maximum interest rate for government-guaranteed school loans. Would the note fail to meet the requirements for negotiability in that situation? Why or why not?

Robert Durbin, a student, borrowed funds from a bank for his education and signed a promissory note for their repayment. The bank lent the funds under a federal program designed to assist students at postsecondary institutions. Under this program, repayment ordinarily begins nine to twelve months after the student borrower fails to carry at least onehalf of the normal full-time course load at his or her school. The federal government guarantees that the note will be fully repaid. If the student defaults on the repayment, the lender presents the current balance-principal, interest, and costs-to the government. When the government pays the balance, it becomes the lender, and the borrower owes the government directly. Durbin defaulted on his note, and the government paid the lender the balance due and took possession of the note. Durbin then refused to pay the government, claiming that the government was not the holder of the note. The government filed a suit in a federal district court against Durbin to collect the amount due. Using the information presented in the chapter, answer the question

Suppose that, in court, Durbin argues that because the school closed down before he could finish his education, there was a failure of consideration. That is, he did not get something of value in exchange for his promise to pay. Assuming that the government is a holder of the promissory note, would this argument likely be successful against it? Why or why not?

Robert Durbin, a student, borrowed funds from a bank for his education and signed a promissory note for their repayment. The bank lent the funds under a federal program designed to assist students at postsecondary institutions. Under this program, repayment ordinarily begins nine to twelve months after the student borrower fails to carry at least onehalf of the normal full-time course load at his or her school. The federal government guarantees that the note will be fully repaid. If the student defaults on the repayment, the lender presents the current balance-principal, interest, and costs-to the government. When the government pays the balance, it becomes the lender, and the borrower owes the government directly. Durbin defaulted on his note, and the government paid the lender the balance due and took possession of the note. Durbin then refused to pay the government, claiming that the government was not the holder of the note. The government filed a suit in a federal district court against Durbin to collect the amount due. Using the information presented in the chapter, answer the question.

Using the categories discussed in the chapter, what type of negotiable instrument was the note that Durbin signed (an order to pay or a promise to pay)? Explain.

Robert Durbin, a student, borrowed funds from a bank for his education and signed a promissory note for their repayment. The bank lent the funds under a federal program designed to assist students at postsecondary institutions. Under this program, repayment ordinarily begins nine to twelve months after the student borrower fails to carry at least onehalf of the normal full-time course load at his or her school. The federal government guarantees that the note will be fully repaid. If the student defaults on the repayment, the lender presents the current balance-principal, interest, and costs-to the government. When the government pays the balance, it becomes the lender, and the borrower owes the government directly. Durbin defaulted on his note, and the government paid the lender the balance due and took possession of the note. Durbin then refused to pay the government, claiming that the government was not the holder of the note. The government filed a suit in a federal district court against Durbin to collect the amount due. Using the information presented in the chapter, answer the question.

For the government to be a holder, which method must have been used to transfer the instrument from the bank to the government?

Risk of Loss. Ethicon, Inc., a pharmaceutical company, entered into an agreement with UPS Supply Chain Solutions, Inc., to transport pharmaceuticals. Under a contract with a UPS subsidiary, Worldwide Dedicated Services, Inc., the drivers were provided by International Management Services Co. During the transport of a shipment from Ethicon's facility in Texas to buyers "F.O.B. Tennessee," one of the trucks collided with a concrete barrier near Little Rock, Arkansas, and caught fire, damaging the goods. Who was liable for the loss? Why?