Negotiable instruments: where are we headed? 🤔

Short Introduction

In this talk, the speaker outlines a practical strategy for using negotiable instruments—bills, notes, and drafts—as payment tools. The video’s purpose is to announce upcoming resources and break down four payment avenues, grounded in state commercial codes and constitutional protections.

🎬 Upcoming Content

• Federal case – City of Glendale, Round 5: The speaker’s first federal case in years. The complaint is designed as a reusable template for any district court and includes a flowchart clarifying the sole proprietorship’s relationship to the opposing city. It also demonstrates how federal and state courts apply commercial code rules.
• Promissory note template: A comprehensive template will be released, described as the “end all be all” of promissory notes. It will eliminate the need for BOE generators, state the exact cause of action if the note is dishonored, and include guidance on medallion stamp guarantees.

💡 Core Concepts

• Under UCC 3-104, there are only two negotiable instruments: a note (unconditional promise) and a draft (unconditional order). A bill received is a draft; payment can be made using other drafts or notes.
• Use your state’s commercial code, not the generic UCC. Courts often reject UCC references even when wording mirrors state law (e.g., California’s CCC Division 4).
• Article 1, Section 10 prohibits states from making anything but gold and silver coin legal tender. A sole proprietorship sits between the individual and each transaction to prevent state citizens from violating this rule. A representative signing or endorsing for the sole proprietorship has no personal liability.

📋 Four Payment Avenues

1. Traditional payment: Satisfy drafts with Federal Reserve notes, checks, or newly generated notes created by credit card use.
2. Endorse and return the bill: As holder or person entitled to enforce, endorse the original draft and tender it back as payment under UCC 3-603.
3. Issue a new note from scratch: Become the maker/issuer of a fresh promissory note. This solves problems such as credit card statements that demand only a minimum payment rather than the full balance.
4. Force the drawer to pay a dishonored draft: If a draft is not paid within 30 days, it is dishonored and the drawer becomes liable. The holder sends a notice of dishonor with a copy marked “not negotiable” under UCC 3-104(d), citing drawer liability under UCC 3-414 and threatening suit.

⚖️ Legal Strategy & Observations

• The speaker observes that courts often let attorneys ignore substantive filings, while responding to irrelevant “trash.” The new federal filing is structured to counter that by arguing unaddressed allegations become stipulated fact and law.
• The strategy will be tested incrementally: several billing cycles using drafts, then issuing new notes with medallion guarantees, and finally forcing drawers to pay dishonored instruments.

Conclusion

The speaker’s message is that negotiable instruments remain viable when handled through a sole proprietorship, the correct state code, and carefully drafted documents. Viewers are encouraged to review the federal case and prepare to use the promissory note template.

Key Takeaway

The most advanced opportunity is to let a dishonored draft convert the original drawer into the liable party—turning the creditor’s own instrument into a basis for suit.