Written by Jason Gordon Updated at September 26th, Contact Us If you still have questions or prefer to get help directly from an agent, please submit a request. Please fill out the contact form below and we will reply as soon as possible. Discussion Question Why do you think order paper requires the indorsement of a holder to negotiate the instrument?
Practice Question Terry makes a promissory note that is payable to Dan or order. Academic Research. But when a bill payable after sight is dishonored by non-acceptance and the drawee subsequently accepts it, the holder, in the absence of any different agreement, is entitled to have the bill accepted as of the date of the first presentment. Kinds of acceptance. A general acceptance assents without qualification to the order of the drawer. A qualified acceptance in express terms varies the effect of the bill as drawn.
What constitutes a general acceptance. Qualified acceptance. Rights of parties as to qualified acceptance. Where a qualified acceptance is taken, the drawer and indorsers are discharged from liability on the bill unless they have expressly or impliedly authorized the holder to take a qualified acceptance, or subsequently assent thereto. When the drawer or an indorser receives notice of a qualified acceptance, he must, within a reasonable time, express his dissent to the holder or he will be deemed to have assented thereto.
When presentment for acceptance must be made. In no other case is presentment for acceptance necessary in order to render any party to the bill liable. When failure to present releases drawer and indorser. If he fails to do so, the drawer and all indorsers are discharged.
Presentment; how made. On what days presentment may be made. When Saturday is not otherwise a holiday, presentment for acceptance may be made before twelve o'clock noon on that day. Presentment where time is insufficient. Where presentment is excused. When dishonored by nonacceptance. Duty of holder where bill not accepted. Rights of holder where bill not accepted. In what cases protest necessary.
If it is not so protested, the drawer and indorsers are discharged. Where a bill does not appear on its face to be a foreign bill, protest thereof in case of dishonor is unnecessary. Protest; how made. Protest, by whom made. Protest; when to be made. When a bill has been duly noted, the protest may be subsequently extended as of the date of the noting.
Protest; where made. Protest both for non-acceptance and non-payment. Protest before maturity where acceptor insolvent. When protest dispensed with. Delay in noting or protesting is excused when delay is caused by circumstances beyond the control of the holder and not imputable to his default, misconduct, or negligence.
When the cause of delay ceases to operate, the bill must be noted or protested with reasonable diligence. Protest where bill is lost and so forth. When bill may be accepted for honor. The acceptance for honor may be for part only of the sum for which the bill is drawn; and where there has been an acceptance for honor for one party, there may be a further acceptance by a different person for the honor of another party.
Acceptance for honor; how made. When deemed to be an acceptance for honor of the drawer. Liability of the acceptor for honor. Agreement of acceptor for honor. Maturity of bill payable after sight; accepted for honor. Protest of bill accepted for honor, and so forth. Presentment for payment to acceptor for honor, how made. Dishonor of bill by acceptor for honor. Who may make payment for honor. Payment for honor; how made.
Declaration before payment for honor. Preference of parties offering to pay for honor. Effect on subsequent parties where bill is paid for honor. Where holder refuses to receive payment supra protest. Rights of payer for honor. Bills in set constitute one bill. Right of holders where different parts are negotiated.
But nothing in this section affects the right of a person who, in due course, accepts or pays the parts first presented to him. Liability of holder who indorses two or more parts of a set to different persons. Acceptance of bill drawn in sets. If the drawee accepts more than one part and such accepted parts negotiated to different holders in due course, he is liable on every such part as if it were a separate bill. Payment by acceptor of bills drawn in sets. Effect of discharging one of a set.
Promissory note, defined. Where a note is drawn to the maker's own order, it is not complete until indorsed by him. Check, defined. Except as herein otherwise provided, the provisions of this Act applicable to a bill of exchange payable on demand apply to a check. Within what time a check must be presented. Certification of check; effect of. Effect where the holder of check procures it to be certified.
When check operates as an assignment. Short title. Definition and meaning of terms. But if blanks are filled in without authority, the rule states different consequences for bills of lading and warehouse receipts.
Under Section of the UCC, any unauthorized filling in of a blank in a bill of lading leaves the bill enforceable only as it was originally. However, under Section , an unauthorized filling in of a blank in a warehouse receipt permits the good-faith purchaser with no notice that authority was lacking to treat the insertion as authorized, thus giving him good title.
This section makes it dangerous for a warehouser to issue a receipt with blanks in it, because he will be liable for any losses to the owner if a good-faith purchaser takes the goods. Finally, note that a purchaser of a document of title who is unable to get his hands on the goods—perhaps the document was forged—might have a breach of warranty action against the seller of the document.
Under Section of the UCC, a person who negotiates a document of title warrants to his immediate purchaser that the document is genuine, that he has no knowledge of any facts that would impair its validity, and that the negotiation is rightful and effective. Thus the purchaser of a forged warehouse receipt would not be entitled to recover the goods but could sue his transferor for breach of the warranty. It is a lot easier to move pieces of paper around than goods in warehouses. Therefore commercial paper, or commodity paper, was invented: the paper represents the goods, and the paper is transferred from one person to another by negotiation.
The holder signs on the back of the paper and indicates who its next holder should be or foolishly leaves that blank ; that person then has rights to the goods and, indeed, better rights. Previous Section. Table of Contents. Next Section.
A bearer instrument, on the other hand, does not include the name of the payee on the instrument, and will typically not have a payee line. A common example of an order paper is a personal check. Other order instruments include registered bonds, bills of exchange a kind of check without interest , and promissory notes a written promise to pay.
To be considered an order instrument, a negotiable instrument must have certain characteristics. It must:. When an order paper is endorsed, it becomes a bearer instrument. For example, when you receive a payment by check and endorse that check, your check, which was an order paper prior to endorsement, becomes a bearer instrument. However, a payee can avoid turning an order paper into a bearer instrument after endorsing it. The payee can use a special endorsement , which involves signing the instrument over to another payee.
Payees can also use a restrictive endorsement to ensure that an endorsed instrument is deposited into a specific account, for example. Checking Accounts. Actively scan device characteristics for identification. Use precise geolocation data. Select personalised content.
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