Business Law Commercial Transaction Committee

The Bankruptcy Appellate Panel for the Eighth Circuit has held that contractual default interest provision is not subject to a liquidated damages analysis under Missouri or bankruptcy law and therefore is allowed as part of a secured claim. Read more

In a case of first impression, the United States Court of Appeals for the Ninth Circuit held recently that a trust created by an individual for tax and estate planning purposes is entitled to receive all state and federal consumer disclosure protections for a consumer credit transaction. Read more

The Supreme Court of Kentucky, relying on provisions in the Kentucky version of the Uniform Commercial Code, ruled that a promissory note was a “negotiable instrument” even though it referenced the possibility of another agreement when defining indebtedness and default. Read more

In a case of first impression, the Texas Supreme Court upheld the right of parties to contract for conditions precedent to preclude the unintentional formation of a partnership without an explicit waiver of the conditions. Read more

A District Court vacated and remanded a Bankruptcy Court order authorizing the assumption and assignment of a lease between Sears and Mall of America, because the District Court found that the Bankruptcy Court had improperly allowed a provision in the lease to override the statutory mandate of Bankruptcy Code section 365(b)(3)(A) requiring similar financial condition. Read more

Recent California legislation addresses issues arising from two well publicized emerging technologies, bitcoin and blockchain. The more recent, Assembly Bill (“AB”) 1489 governs regulatory and substantive law in respect of virtual currency or bitcoin. AB 2658, enacted late last year, creates a committee to study and report on the use of blockchain, bitcoin’s underlying technology, in various contexts and transactions. Both these bills recognize the importance of harmonizing existing law with actual practice utilizing new and emerging technologies. Read more

The bankruptcy court for the Southern District of New York held that certain liquidated damage clauses in an aircraft lease violate New York Commercial Code Article 2-A and, thus, are unenforceable as against public policy, not only against the lessee, but also as against the lessee’s guarantor. In In re Republic Airways Holdings Inc. 2019 WL 630336 (Bankr. S.D.N.Y. Feb. 14, 2019), the bankruptcy court granted summary judgment on the objection to the lessor’s claim on the grounds that the liquidated damage provisions were not reasonable in light of the anticipated harm from default measured at the time of the lease’s formation. Read more

As you know, the Uniform Commercial Code (the “UCC”) governs most commercial transactions including sales of goods, personal property leases, negotiable instruments, bank deposits and collections, letters of credit, and secured transactions. It has been adopted on a nearly uniform basis by all 50 states and is regarded as one of the most significant modern legal developments. The drafting and revision process, by which a model code is created and circulated to the states for review and enactment as state… Read more

The recent decision in SE Prop. Holdings, LLC v. Unified Recovery Grp., LLC, No. CV 14-2060, 2018 WL 6267183 (E.D. La. Nov. 30, 2018) (“SE Holdings”) illustrates potential problems for drafting, policing, and litigating security interests in accounts. The district court held that an IRS tax lien had priority over a security interest in accounts taken and perfected years before the tax lien arose, based on the judicially created “choateness” doctrine. Read more

The Commercial Transactions Committee (the “CTC”), a standing committee of the CLA Business Law Section (the “Section”), is currently seeking members. Read more