Analysis of Promissory Note

Company Y has filed a suit in court that demands a specific enforcement decree to be issued against Company X. The decree should compel Company X to deliver the goods that Company Y had bought from them to country Y. The dispute arose due to an error on the contract. Company X and Y had an oral agreement that stated the purchased goods were to be shipped to Country Y but there was an error on the written contract. The terms were that the goods were to be conveyed to Country X. The contract was made to be governed by the United Nations Convention on Contracts for the International Sale of Goods (CISG) and it was a complete and full expression of the parties.

Court’s Decision

            The dispute between the Company X and Company Y can be examined through the parole evidence rule provided in Article 8 of the CISG. The rule states that extrinsic evidence cannot be used to change the terms of a written contract. Ostendorf (2015) points out that the English law also considers previous negotiations inadmissible to the interpretation of contracts. However, the parole rule under the convention will presume that the written contract represents all the agreement between two contracting parties. 

 A party seeking an equitable remedy can file for rectification, which is the correction of a mistake in a written contract (Davies, 2016).  The party that seeks rectification has to convince the court on their claim. In this case, Company Y must produce compelling evidence that the contract does not represent the original intent of the parties and once changed it will reflect those intentions.

Article 8(3) of CISG dictates that to determine the intentions of the contracting parties, all circumstances relevant to the case should be taken into consideration. In the case of Beijing Metals & Minerals Import/Export Corp. v. American Business Center, Inc., the court permitted the use of oral evidence regarding oral agreement. Therefore, the court will allow the oral evidence from Company Y.

Promissory Notes

Uniform Commercial Code (UCC)

            Article 3 of the UCC governs negotiable instruments of which the promissory note is one of them. A promissory will be valid if it is in writing and bears the signature of the drawee. The instrument can also be transferred under the UCC, the assignee has the same rights and responsibilities as the assignor. In this case, Dan has a right to present the promissory note to Juana since the promise to be paid has been transferred to him. However, Juana cannot be held accountable for the note since she has been declared bankrupt, the law on bankruptcy will apply and her assets will be discharged according to its requirements. Raul cannot be held accountable since he signed the note without recourse, as the assignor he has no responsibility for payment.

Unification of the Law Relating to Bills of Exchange (ULB)

            The Unification of the Law Relating to Bills of Exchange (ULB) unifies the requirements for the Bills of Exchange and the Promissory Notes. Article 11 of the ULB allows for the endorsement of the promissory note.  Article 3 of the ULB governs the negotiable instruments such as promissory notes (Weinstein, 2011). The ULB also allows for qualified endorsement, Raul’s transfer is qualified, and therefore, the promissory note can only be transferred in accordance to its form and as an ordinary assignment. Article 14 states that an endorsement transfers all the rights of the promissory note. The endorser guarantees acceptance and payment, and therefore, Cathy Charles will be responsible for paying Dan since she is the one who endorsed the promissory note.

Bill of Exchange Act (BEA)

            Under the Bill of Exchange Act of 1882, a Promissory Note can be indorsed. The note transfer from Juana to Raul to Cathy and Dan is therefore recognized under BEA. The note must be presented to the endorser for them to be liable. The note should also be presented within a reasonable time, which is determined by the facts of the business. The responsibility for the payment of the promissory note lies with Cathy, she is the one who indorsed the note to Dan.

References

Davies, P. (2016). Jurisdiction rectification versus interpretation: the nature and scope of the equitable. Cambridge Law Journal, 75(1), pp.62-85.

Ostendorf, P. (2015). The exclusionary rule of English law and its proper characterization in the conflict of laws – is it a rule of evidence or contract interpretation? Journal of Private International Law, 11(1), pp.163-183.

Weinstein, M. (2011). The Non-Uniform Commercial Code: The Creeping, Problematic Application of Article 9 to Determine Outcomes in Foreclosure Cases. University of New Hampshire Law Review, 14(2), pp.267-302.