As a gambling facility, MGM Desert Inn, Inc., regularly holds and executes negotiable instruments. During a period of two months, patron William E. Shack Jr. entered MGM and delivered eight checks to the casino in exchange for markers. These checks, which totaled \($93,400,\) were signed by Shack and dated at the time of transfer. When MGM sent Shack’s checks to the bank for payment, they were dishonored because the funds in Shack’s account were insufficient.
MGM filed an action in district court to obtain the \($93,400.\) Shack contended that a casino host had told him he had sufficient remaining casino credit to receive the markers. The district court judge ruled in favor of MGM, affirming its argument that the checks were negotiable instruments and stating that no evidence of an oral agreement between the casino and Shack was provided. Shack was ordered to pay MGM \($5,000\) for attorney fees in addition to the \($93,400\) originally owed on the checks. 1. If you were employed at MGM, what would you do to avoid future disputes with your patrons about the nature of payment agreements?
2. If Shack’s claims about an oral agreement with MGM were true, would that affect your decision about whether payment on the checks was currently due?