ch25

West's Business Law with Online Research Guide, 9th Edition

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TRANSFER OF INSTRUMENTS Assignment: Under general contract principles, a negotiable instrument may be transferred to an assignee , who then holds the instrument with all the rights of the assignor . Negotiation: Transfer of an instrument in such a form that the transferee becomes a holder , who has at least the same rights in the instrument as the transferor, and may have more rights than the transferor. Negotiating Order Instruments: The payee may negotiate an order instrument to a third party by an indorsement by the payee in favor of the third party. Negotiating Bearer Instruments: Unlike an order instrument, a bearer instrument need not be indorsed to transfer the payee’s rights to the transferee. All that is required is delivery to the new bearer. Converting Instruments: The proper method of negotiation depends on the nature of the instrument at the time of negotiation . Thus, an order instrument can be converted into a bearer instrument by, e.g. , indorsing the instrument in blank. Likewise, a bearer instrument can be converted into an order instrument Ch. 25: Negotiable Instruments: Transferability and Holder in Due Course - No. 1 West’s Business Law (9th ed.)
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by, e.g. , indorsing it in such a way as to identify a particular payee. Ch. 25: Negotiable Instruments: Transferability and Holder in Due Course - No. 2 West’s Business Law (9th ed.)
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INDORSEMENTS Indorsement: A signature, with or without additional words or statements ( e.g. , “for deposit only,” “payable to Jane White,” “payable from acct. # 000001,” etc.), made by the indorser in order to transfer her rights to the indorsee . Allonge: A piece of paper firmly attached to an instrument on which transferees can make indorsements when there is no room on the instrument itself for their indorsement. Blank Indorsement: An indorsement that specifies no particular indorsee and can consist of a mere signature . Special Indorsement: An indorsement that indicates the specific indorsee to whom the indorser intends to make the instrument payable ( e.g. , “pay to the order of X”). Qualified
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ch25 - TRANSFER OF INSTRUMENTS Assignment: Under general...

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