Business Law for Commercial Transactions
Assignment 1: Discussion Questions
The discussion assignment provides a forum for discussing relevant topics for this week based on the course competencies covered. To support your work, use the textbook, lectures and scholarly outside sources. As in all assignments, cite your sources in your work and provide references for the citations in APA format. Post the answers to both parts in one discussion post and do not attach documents.
Discussion Question Part I
Select ONE of the scenarios below and explain the best solution.
Scenario 1 - Negotiable Instruments
Kaitlyn Greene borrowed $25,000 from Regions Bank for her education and signed a note to repay the funds. The bank made the loan under a federal program that does not require repayment until six to nine months after graduation or the student fails to enroll in at least one-half of the full time load. The government guarantees that the note will be fully repaid. If the student defaults on the repayment, Regions can present the government with the current balance. When the government pays the balance, it becomes the lender and the borrower owes the government. When Greene failed to pay the debt, the government paid the lender, Regions Bank, and took possession of the note. The government then obtained a court order allowing it to garnish Greene's wages and her federal income tax refund. Greene filed a lawsuit seeing to avoid the payment and claiming that the debt was not valid because she had not signed any document promising to pay the government. She also argued that the note lacked consideration.
- Was the note signed by Greene an order to pay or a promise to pay? Explain.
- For the government to be a holder, which method must have been used to transfer the instrument from the bank to the government?
- Address Greene's arguments concerning the validity of the debt. Determine the outcome of the case and provide support for your answer.
Scenario 2 - Holder in Due Course
Christy Casey hired Denise Black as a bookkeeper at Brookdale Senior Living, Inc. When Casey learned that Denise embezzled more than $100,000 and did not pay over $250,000 in state and federal taxes owed by the business. Casey fired Black and said that if she did not repay the embezzled funds, she would notify law enforcement. Black started working as a bookkeeper for Staffing Specialists, a business owned by her father. Without proper authorization, Black wrote a check to Brookdale for $195,000 out of Staffing Specialist's account and deposited the check directly into Brookdale's checking account. Black told Casey that the funds were a loan from her family so she could repay Brookdale. Casey used the funds to pay the back taxes owed. Two years later, Black's father discovered her theft and sued both Casey and Brookdale for conversion because Black did not have authority to take the funds.
- Evaluate Brookdale's status as a holder in due course (HDC).
- Since Casey knew that Black previously embezzled funds from Brookdale when she was an employee, should Casey have been suspicious about the source of the funds that Black used to repay the debt? Could this knowledge impact the court's decision?
Provide support for your answers.
Discussion Question Part II
Based on the business you selected in Week 1, select three of the topics from the listbelow and explain how your business will handle issues related to the topics. Justify your answers with relevant laws, cases, or examples.
- Prevention of forgery/embezzlement (internal employees)
- Dishonored (returned) checks
- PayPal
- Alternative payments such as Bitcoin, BPAY
- Gift cards
- Issuing credit to customers
- Credit and debit cards
- Personal checks
- Post-dated checks