Delivery physical transfer of possession of the instrument by the maker or

Delivery physical transfer of possession of the

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Delivery – physical transfer of possession of the instrument by the maker or drawer with the intention to transfer title to the payee and recognize him as holder thereof. o Essential for the instrument to be deemed as issued as it is the final act to consummate the transfer o Must be made under the authority of the party making, drawing, accepting or indorsing the instrument o Valid and intentional delivery is presumed. SUBSEQUENT NEGOTIATION SECTION 30. What constitutes Negotiation An instrument is negotiated when it is transferred from one person to another in such manner as to constitute the transferee the holder thereof. If payable to bearer, it is negotiated by delivery; if payable to order, it is negotiated by the indorsement of the holder completed by delivery. o If payable to bearer, negotiated by mere delivery. o If payable to order, negotiated by indorsement, completed by delivery CASE1 INDORSEMENT OF AN INSTRUMENT PAYABLE TO BEARER Sec 40. Indorsement of Instrument Payable to Bearer Where an instrument payable to bearer is indorsed specially, it may nevertheless be further negotiated by delivery; but any person indorsing specially is liable as indorser to only such holders as make title through his indorsement. General Rule: An originally bearer instrument will always be a bearer instrument. An instrument payable to bearer is not converted into an instrument payable to order by being indorsed specially. Thus, the indorsee may further negotiate the instrument by mere delivery. Liability of Special Indorser: Person indorsing specially is liable only to those holders who can trace their title to the instrument by a series of unbroken indorsements from such special indorser. Example: “Pay to B Sgd. A Pay to C Sgd. B” A is liable to B and C and B is liable to C. Sgd. C (delivered to D) A and B will not be liable to D. But C will be liable to D. CASE 2 TRANSFER OF ORDER INSTRUMENT WITHOUT INDORSEMENT Sec 49. Transfer without indorsement; effect of. Where the holder of an instrument payable to his order transfers it for value without indorsing it, the transfer vests in the transferee such title as the transferor had therein, and the transferee acquires in addition, the right to have the indorsement of the transferor. But for the purpose of determining whether the transferee is a holder in due course, the negotiation takes effect as of the time when the indorsement is actually made. Effect of transfer without indorsement of order instrument The instrument is in effect merely assigned to the transferee. 1. Equitable Assignment o Transferee acquires the instrument subject to defenses and equities available among prior parties. o If the transferor had legal title, transferee acquires such title and in addition, the right to have the indorsement of the transferor and also the right to have the indorsement of the transferor 2. No presumption o Presumption of sufficiency of consideration and title that is enjoyed by holders of duly negotiated instruments will not be enjoyed by transferee.
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  • Fall '09
  • TUGAS
  • Payment, Promissory note, Negotiable instrument, indorsement, Bearer instrument

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