University:
Indiana University Bloomington
Course:
Financial and Managerial Accounting: Information for Decisions - John J. Wild
Academic year:

2024
Views:

159

Pages:

2
Author:

bratrochanter

Summary of Appendix B B-45 to B-48: Lessor's Remedies and Introduction to Negotiable Instruments Lessor’s Remedies for Lessee Defaults 1. Disposition of Goods (§2A-527): o Lessors may lease, sell, or dispose of goods after a lessee's default. o Damages recoverable include:  Unpaid rent accrued before the disposition.  The difference between remaining lease payments and rent under the new lease (if applicable).  Incidental damages (e.g., storage, transportation costs). o Profits from the disposition do not need to be accounted for to the lessee, but lessees are entitled to credits for excess recoveries. 2. Damages for Non-acceptance or Repudiation (§2A-528): o If goods are retained or disposition is insufficient, damages are calculated as:  Accrued rent.  The difference between future lease payments and the market rent for the remaining term.  Incidental damages. o If inadequate, damages may include the lessor's expected profit and reasonable overhead. 3. Action for Rent (§2A-529): o Lessors can sue for rent on:  Goods accepted and not repossessed.  Identified goods that cannot reasonably be disposed of. o Payment of damages entitles lessees to the goods for the remaining lease term. 4. Incidental Damages (§2A-530): o Include costs like transportation, care of goods, or reasonable commissions related to the lessee’s default. 5. Residual Interest (§2A-532): o Lessors can recover damages for loss or harm to their residual interest in the leased goods caused by the lessee’s default. Rights Against Third Parties (§2A-531):  Lessors and lessees can sue third parties for injuries to goods identified in the lease if they have: o A security interest. o An insurable interest. Risk of loss for the goods. Recovery by one party acts as a fiduciary benefit to the other unless otherwise agreed. o  Introduction to Negotiable Instruments 1. Scope (§3-102): o Covers negotiable instruments like checks, notes, and drafts. o Excludes money, payment orders (Article 4A), and securities (Article 8). o Federal Reserve regulations supersede inconsistent provisions. 2. Definitions (§3-103): o Key terms:  Acceptor: A drawee agreeing to pay a draft.  Drawer: The party ordering payment in a draft.  Maker: The party promising to pay in a note.  Negotiable Instrument: A written promise or order to pay money under specific conditions.  Ordinary care: Reasonable commercial standards observed by banks or other parties. 3. Negotiable Instrument (§3-104): o Defined as an unconditional promise or order to pay a fixed sum of money that:  Is payable to bearer or order.  Is payable on demand or at a definite time.  Contains no additional obligations beyond payment. o Examples include checks, notes, and drafts. 4. Key Concepts (§3-104 - §3-103): o Instruments can serve as notes (promises to pay) or drafts (orders to pay). o Terms like "check" and "cashier's check" are specialized forms of negotiable instruments.