From: Eric Hughes <hughes@soda.berkeley.edu>
Date: Tue, 4 May 93 15:47:25 PDT
To: strat@intercon.com
Subject: checks
In-Reply-To: <9305041725.AA34057@horton.intercon.com>
Message-ID: <9305042244.AA27314@soda.berkeley.edu>
MIME-Version: 1.0
Content-Type: text/plain


For those who don't want to read about an arcane bit of commercial
paper law, please stop reading now.

>Much as I respect you Eric, I direct your attention to the myriad of "checks" 
>being sent out by AT&T and MCI, to name a few offenders. These bear the 
>legend: "endorsement of this check constitutes your acceptance of <foo> as 
>your long distance carrier."

From West's Nutshell handbook on _Commercial Paper_, p 55:

  "[...] an instrument is not negotiable unless it contains an
unconditional promise or order. [UCC] 3-104(1)(b).  See 3-105.  That
is, the obligation must be expressed in terms which are absolute and
not subject to contingencies, provisos, qualifications, or
reservations which may impair the obligation to pay.  It must be a
'courier without luggage.' Overton v. Tyler, 3 Pa. 346,347 (1846)."

If a check is not negotiable, that does not mean that the order on it
is invalid; it means that the rights of third and later parties to
collect on the order are precariously held.  This might not impede the
money getting transferred, though.  

The thing about the LD company checks is that their writing doesn't
seem to be a condition on the order to pay.  After all, you don't have
to indorse a check in order to get the money from it; you can always
take it to the bank it was drawn on directly.  The condition on these
checks seems to be a condition upon your indorsement of the check;
conditions on indorsements do not affect negotiability.

>Weasels.

I agree.

Eric