Please answer the following questions

1) Do UCC Article 3 requirements for negotiability make it easy to negotiate commercial paper? What is the importance of the seamless negotiation of commercial paper? Do all of the requirements of negotiability make sense? Explain.

2) What are some ways to reduce check fraud?

the picture below are for question number 3. answer that. and see the last picture with the questions and answers them from the two other photos. make sure to answer all of the questions.

3) Read the Business Case Study, RR Maloan Investments, Inc. v. New HGE, Inc., on page 356 of your text and answer questions 1, 3, 4, 5 on page 358.

358 UNIT FIVE Negotiable Instruments Questions for Analysis 1. Law How did the majority in this case respond to 4. Technological Dimensions Should the changes to the question stated at the beginning of this feature? the check-collection process caused by electronic What was the reasoning behind the response? banking have affected the decision in this case? 2. Law Did the dissent agree or disagree with the 5. Implications for the Businessperson What is majority's interpretation of the principles that apply the significance of the outcome in this case to a to determine a holder's good faith? Why or why not? business? 3. Ethics Should any business that observes "reasonable commercial standards of fair dealing" in cashing a check be absolved of liability for failing to verify its validity?UNIT 5 Negotiable Instruments Business Case Study with Dissenting Opinion RR Maloan Investments, Inc. v. New HGE, Inc. In Chapters 17 and 18, we reviewed some of the laws that govern checks and the banking system, explaining the rights, duties, and liabilities of banks and their customers. We discussed those concepts as they apply under Articles 3 and 4 of the Uniform Commercial Code (UCC). In this unit's Business Case Study with Dissenting Opinion, we examine the case of RR Maloan Investments, Inc. v. New HGE, Inc., ' a recent decision focusing on whether a holder was entitled to obtain payment of a check as a holder in due course (HDC). By meeting certain requirements, a holder becomes an HDC and takes an instrument free of most of the defenses and claims that could be asserted against the transferor. The requirements for attaining this status are that the holder takes a negotiable instrument (1) for value, (2) in good faith, and (3) without knowledge that it is defective. If a party cashes a postdated check before its due date without making any efforts to verify the check's validity, has that party taken the check in good faith? That was question in the RR Maloan case. Case Background New Houston Gold Exchange, Inc. (HGE), issued a stop-payment order on the check based on infor- entitled to collect on the check. The court entered a $3,500 postdated check to Shelly Mckee to mation that the watch was counterfeit. When RR a judgment in the plaintiff's favor, but on the buy a purportedly genuine Rolex watch. Mckee Maloan presented the check to HGE's bank for defendant's appeal, the judgment was reversed. indorsed the check and presented it to RR Maloan payment, the bank refused to honor it. RR Maloan RR Maloan appealed this decision to a higher state investments, Inc., a check-cashing service. RR filed a claim in a Texas state court against HGE to appellate court. Moloan cashed the check. Meanwhile, HGE issued recover the funds, asserting that it was an HDC Majority Opinion William J. BOYCE, Justice. not otherwise so irregular or incomplete as to call into * * * * question its authenticity." No evidence in this record sug- At trial, Houston Gold Exchange argued that the gests that the check was forged, altered, or not authentic. check at issue was not a negotiable instrument because There is no dispute on this record that RR Maloan it was post-dated. We reject this contention because the took the check "for value" as required under Section negotiability of a check is not affected by post-dating. 3.302(a)(2) (A). * * * * With respect to good faith under Section 1.201(b) (20), The evidence adduced at trial conclusively estab- "good faith" is defined as "honesty in fact and the lishes that RR Maloan was a holder in due course. observance of reasonable commercial standards of fair Under [Texas Business & Commercial Code Section] dealing." The record here conclusively establishes RR 3.302(a)(1) [Texas's version of UCC 3-302(a)(1)] a holder Maloan's good faith as that concept is defined for these of an instrument is a holder in due course if "the instru- purposes in the statute. ment when issued or negotiated to the holder does not RR Maloan's owner testified that the company is bear such apparent evidence of forgery or alteration or is a check-cashing business. The owner testified that an 1. 428 S.W.3d 355 (Tex.App.-Houston 2014).employee of RR Maloan took Houston Gold which stated: "Knowledge of the following facts does Exchange's check from Mckee in exchange for not of itself give the purchaser notice of a defense or cash in the normal course of business. The owner claim * * * that the instrument is antedated or postdated testified that at the time the check was taken, he did not have knowledge that the purported Rolex watch * * * ." Former Section 3.304(d)(1) was deleted as part was not authentic and did not have knowledge of any of a wholesale revamp of Article 3 and other provisions claims or defenses to the check. No evidence was pre- in 1995. The dissent contends that * * * this deletion sented that the owner or any employee of RR Maloan means that Texas law does indeed impose a duty to had knowledge at the time the check was accepted that investigate a post-dated check. the watch was not authentic. We reject this contention because the dissent points to nothing in the statutory language of current Article As for reasonable commercial standards, Texas law 3, the case law, the legislative history, or in legal com- holds that knowledge of post-dating by itself does not mentary indicating that the policy reflected in former (1) give notice of a defense or claim; or (2) impose a Section 3.304(d)(1) * * * has ceased to reflect the policy duty to make any investigation to ascertain whether or of current Texas law. not the maker had any defenses which would have jus- * * * The deletion of former Section 3.304(d)(1) tified him in refusing to pay the payee. Because the fact * * * does not compel a departure from [the principle] of post-dating did not impose a duty on RR Maloan to that a post-dated check is a negotiable instrument. investigate the surrounding circumstances, Houston In light of this record and the admitted validity of the Gold Exchange cannot establish that RR Maloan failed to signatures on the check, production of the check entitled observe "reasonable commercial standards of fair deal- RR Maloan to recover unless Houston Gold Exchange ing" by failing to investigate based on the post-dating of established a viable defense that would defeat holder in the check. [Emphasis added. ] due course status. An assertion that the sale was condi- The dissenting opinion urges a contrary conclusion tioned on the watch's authenticity, even if true, does not because * * * [the] no-duty-to-investigate determina- bar recovery by RR Maloan; there is no evidence that it tion [was predicated] on former Section 3.304(d)(1), had knowledge of this asserted fact. Dissenting Opinion Tracy CHRISTOPHER, Justice. is ante-dated or post-dated does not of itself give the While I agree with the majority that a postdated check purchaser notice of a defense or claim. Although this is a negotiable instrument, I would affirm the judgment was true at the time, Section 3.304(d) was deleted when and the trial judge's implied finding that RR Maloan did Article 3 was revised in 1995. not act in good faith either in cashing the check before When the legislature amends a statute and excludes its due date or in cashing the check without making any certain language of the former statute in its new ver- efforts to verify the check's validity. sion, we are to presume the language was excluded for * * * * a reason and the excluded language is no longer the * * * Here, the trial court could have found that RR law. Because the legislature deleted the language from Maloan failed to observe reasonable commercial stan- Section 3.304 * * * we should presume that [it] no lon- dards of fair dealing under the factual circumstances ger embodies current Texas law. outlined by the majority above. RR Maloan either cashed * * * * the check before its due date or cashed it after Houston By rendering judgment in favor of RR Maloan, the Gold Exchange stopped payment on the check. majority holds that a check-cashing company can cash a The majority states that the case can be decided check before its due date without any inquiries to deter- under Texas [legal principles that were applied under] a mine the instrument's validity. Because RR Maloan sees UCC provision that was deleted by the Texas legislature and hears no evil, it acts in good faith. I believe this is a generation ago. [According to those principles, under] inconsistent with the current definition of good faith as we Section 3.304(d) * * * knowledge that the instrument must construe it under the existing version of the UCC