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Negotiable Instrument Sec 13-16 and 23 (SECTION 14 INCOMPLETE and…
Negotiable Instrument Sec 13-16 and 23
SECTON13
Date may be inserted when:
an instrument is payable at a fixed period AFTER SIGHT but the ACCEPTANCE is UNDATED
an instrument is payable at a fixed period AFTER DATE but is ISSUED UNDATED
Effects of insertion of wrong date
The insertion of a WRONG DATE DOES NOT avoid the instrument in the hands of the SUBSEQUENT HDC; but as to him the date so inserted is to be regarded as the TRUE DATE.
ANY HOLDER may insert therein the true date of issue/acceptance and the instrument shall be payable accordingly.
*The insertion of WRONG DATE constitutes MATERIAL ATERATION.
SECTION 14
INCOMPLETE and DELIVERED (personal defense)
AUTHORITY TO FILL UP THE BLANKS
The HOLDER/person in possession has prima facie authority TO COMPLETE an INCOMPLETE INSTRUMENT by filling up the blanks therein
The law speaks of MATERIAL PARTICULAR (blanks for date, due date, name of PAYEE, amount, rate of interest) may be filled in. It has been held that even the blank for the name of the DRAWER may be filled up.
AUTHORITY TO PUT ANY AMOUNT
A signature on a BLANK paper delivered in order to be converted into a NI is a prima facie authority to fill it up as such for any amount.
RIGHT AGAINST PARTY PRIOR TO COMPLETION
If an instrument is incomplete when delivered,
the HOLDER has prima facie authority to fill up the
blanks thereon.
In either case of the above (2) situations, the presumption is that the BLANK was filled in ACCORDANCE W/ THE AUTHORITY GIVEN and W/IN REASONABLE TIME.
If a blank paper is delivered by the person making the signature, the HOLDER has prima facie authority to fill it up for any amount if the person making the signature INTENDED TO CONVERT it into NI.
RIGHT OF HDC
not enforceable; personal defenses
The rule is founded upon the principle that where one of 2 persons must suffer by the bad faith of another, the loss must fall upon the one who FIRST REPOSED confidence and made it possible for the loss to occur.
SECTION 16 COMPLETE and UNDELIVERED (personal defenses)
UNDELIVERED – Every contract on NI even if it is completely written is INCOMPLETE AND REVOCABLE UNTIL it is delivery for the purpose of giving it effect.
a. DELIVERY – transfer of possession, actual/constructive, from one person to another. It may be made either by the maker/drawer himself or through a duly authorized agent.
b. ISSUE – FIRST delivery of the instrument, complete in form, to a person who takes it as HOLDER.
c. HOLDER – PAYEE/INDORSEE of bill/note who is in possession of it, or the BEARER thereof.
IN POSSESSION OF PARTY OTHER THAN HDC
If a complete instrument is found in the possession of an IMMEDIATE PARTY (know the conditions/limitations placed upon delivery of instrument) or a REMOTE PARTY (indirect contractual relation to each other) other than HDC, there is prima facie presumption of delivery but subject to rebuttal.
An UNDELIVERED instrument is INOPERATIVE because DELIVERY is a PREREQUISITE to LIABILITY. However, if instrument is NO LONGER in the possession of the person who signed it and it is COMPLETE in its terms, “a VALID AND INTENTIONAL delivery by him is PRESUMED until the contrary is proved”.
DELIVERED UNCONDITIONALLY OR FOR A SPECIAL PURPOSE
If delivery was made/authorized, it may be shown to have been conditional, or for a special purpose only and not for the purpose of transferring the property (title) to the instrument.
When delivery is made, it is presumed to be made w/ the intention to transfer ownership of the instrument to the payee.
(eg. A delivers the note to B on condition that it will not be binding on him UNTIL co-maker has been procured or for safekeeping, or for collection only.
If delivery was made/authorized, it may be shown to have been conditional, or for a special purpose only and not for the purpose of transferring the property (title) to the instrument.
When delivery is made, it is presumed to be made w/ the intention to transfer ownership of the instrument to the payee.
IN THE HANDS OF HDC
If a COMPLETE instrument is in the hands of HDC, a valid delivery thereof by all parties PRIOR to him is CONCLUSIVELY PRESUMED.
A presumption is said to be CONCLUSIVE when it admits of no evidence to the contrary.
SECTION 23 Effect of FORGED signature
FORGERY – counterfeit-making or fraudulent alteration of any writing w/ INTENT TO DEFRAUD (eg. Signing of another’s name; alteration of an instrument in the name,a mount, description of person and the like)
(2) CASES OF FORGERY IN GENERAL
Forgery of PROMISSORY NOTES
indorsement of the note
indorsement of the note
Forgery of BILLS OF EXCHANGE
indorsement of the bill
DRAWER’s signature (either w/ acceptance by DRAWEE; or w/o such acceptance but the bill is paid by DRAWEE)
2 EXCEPTIONS TO THE GENERAL RULE THAT NO RIGHT/TITLE CAN BE ACQUIRED TO AN NI THROUGH OR UNDER A FORGED/UNAUTHORIZED SIGNATURE
If the party against whom it is sought to enforce such right is PRECLUDED (stopped) from setting up forgery or want of authority; and
Where forged signature is NOT necessary to the HOLDER’S TITLE in w/c case the forgery may be DISREGARDED.
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