The signature is not limited to the personal writing of one`s own name. “Any symbol executed or adopted by a party with the present intention of authenticating a scripture” will serve. Uniform Commercial Code, § 1-201(39). This means that a manufacturer or designer can make an imprint of their signature with a stamp or even an X if they signed with it. It can be typed or fingerprinted. In some cases, appropriate letterhead may be used to make the note or draft negotiable without further signature. The position of the signature is also irrelevant. Blackstone Kent`s handwritten note “Ten days after this note, I promise, Blackstone Kent, to pay $5,000 on Webster Mews` order” is sufficient to make the note negotiable, although there is no subsequent signature. In addition, the signature can be in a business name or an assumed name. (Note: Special problems occur when an agent signs on behalf of a principal. We examine these problems in Chapter 22, Responsibility and Relief.) The only promise or order admissible in a negotiable instrument is to pay a certain amount of money. Any other promise or order voids the negotiability.
The reason for this rule is to prevent an instrument from having an indeterminate value. The usefulness of a negotiable instrument as a substitute for money would be seriously undermined if the holder of the instrument had to investigate whether a provision or condition had been satisfied before the thing had any value (i.e. before the debtor`s payment obligation had matured). Whether or not a document is negotiable is the first of our four major questions, and it is a question that non-lawyers must face. Chartered accountants, retailers and financial institutions often deal with notes and cheques, and usually have to make quick judgments about negotiability. If the required elements of §§ 3-103 and 3-104 of the Uniform Commercial Code (UDC) are not completed, the paper is not negotiable. Thus, paper meets the following criteria: (f) “cheque” means (i) a draft, other than a documentary bill of exchange, payable on demand and made payable to a bank, or (ii) a cashier`s cheque or cashier`s cheque. An instrument can be a cheque, even if it is described on the front with another term such as “money order”. A made-to-order instrument is an instrument that is paid to a specific person or entity that is identifiable in advance. To be payable on order, the instrument must, as is generally the case, indicate this by preceding the name of the beneficiary with the words “payable on order”.
An instrument may be payable on behalf of the manufacturer, shooter, shooter or any other person. It may also be payable in the order of two or more beneficiaries (together or subsidiarily), to an estate, trust or fund (in this case, to the agent, office or officer, or to a partnership or unincorporated association). Suppose a printed form indicates that the instrument is payable to both the order and the holder. In this case, the instrument is payable only upon order. However, if the words “to the carrier” are handwritten or typed, the instrument may be paid for either to order or to the carrier. (a) Except as otherwise provided in paragraphs (c) and (d), “negotiable instrument” means an unconditional promise or order to pay a fixed amount of money, with or without interest, or other charges described in the undertaking or order, where: (g) “bank cheque” means a bill of exchange in which the subscriber and the beneficiary are the same bank or branch of the same bank. The rules just mentioned are the conditions for the ability to negotiate. The treatment of two additional details – missing terms or ambiguous terms – completes the picture. Despite the presence of readily available form tools, people sometimes omit words or create confusing documents. If an instrument is not negotiable, it is generally not accepted as a means of payment in commerce.
The UCC requires that the value of a negotiable instrument be ascertainable at first glance without reference to other documents. Thus, the negotiable instrument must be in writing, signed by the manufacturer or designer, an unconditional promise or a money order of a fixed sum of money, payable on demand or at a specified time, and payable to the order or holder, unless it is a cheque. If the act is incomplete or ambiguous, the UCC contains rules for determining the meaning of the instrument. This definition establishes the basic principle of a negotiable instrument: the holder must be able to identify all the essential terms on the front of the instrument. Controls are negotiable instruments, but they are mainly covered by Article 4 of the UCC. See also banking law. Secured transactions may contain negotiable instruments, but they are mainly covered by Article 9 of the UCC. See also Secured transactions. In the event of a conflict between the UCC Statutes, Articles 4 and 9 of Article 3 shall apply. If it is not clear whether the deed is a banknote or a design, the holder may treat it as one of the two. Handwritten terms control typed and printed terms, and typed terms control printed terms.
Words control numbers unless the words themselves are ambiguous, in which case numbers control. If the instrument contains a “clearly visible statement, however expressed, that the promise or order is not negotiable”, its negotiability is destroyed, with the exception of cheques, and “an instrument may be a cheque, even if it is described on the front by another term such as `money order`”. Uniform Commercial Code, § 3-104(d); Uniform Commercial Code, Section 3-104(f). (j) `certificate of deposit` means a document containing a confirmation from a bank that a sum of money has been received by the bank and an undertaking by the bank to repay the funds. A certificate of deposit is a banknote from the bank. (i) “traveller`s cheque” means an instrument that (i) is payable on demand, (ii) is used or payable with or through a bank, (iii) is referred to as a “traveller`s cheque” or substantially similar term and (iv) requires a countersignature as a condition of payment from a person whose signature appears on the document. The derivative property rule, which is applicable in most areas of law, does not allow an owner to transfer rights in a property greater than his own. If an instrument is negotiable, this rule is suspended. A bona fide purchaser who has no knowledge of any defect of ownership or claims against him assumes ownership of the instrument free from defects or claims. With regard to the suspension of the ownership of derivatives rule, Article 3 provides safeguards to protect parties to transactions in negotiable securities. A practical difference between a demand instrument and a temporal instrument is the date on which the limitation period begins to run.
(A limitation period is a limitation on the time within which a creditor must take legal action to collect the debt.) Article 3-118(1) of the UCC states that an action for enforcement of a payment at a particular time must be brought “within six years after the due date” (or the accelerated due date). In the case of required documents, an action must be commenced “within six years of the request”. (c) An arrangement that meets all the requirements of subparagraph (a), except paragraph 1, and otherwise falls within the definition of “control” in subparagraph (f) is a negotiable instrument and control. Negotiable instruments are primarily subject to the law of the State. Each state has adopted Article 3 of the Uniform Commercial Code (UCC) with some amendments as the law on negotiable securities. The UCC defines a negotiable instrument as an unconditional writing that promises or orders the payment of a fixed amount of money. Drafts and debt securities are the two categories of instruments. A bill of exchange is an instrument that orders payment. An example is an exam. A ticket is an instrument that promises that a payment will be made. Certificates of deposit (CDs) are banknotes.
Bills of exchange and banknotes are often used in commercial transactions to finance the movement of goods and to guarantee and distribute loans. To be considered negotiable, an instrument must meet the requirements set out in Article 3. Negotiable instruments do not include funds, payment orders within the meaning of Article 4A (transfers of funds) or securities as defined in Article 8 (investment securities). An instrument that says it is payable on demand is payable on demand, as is an instrument that does not specify the time limit for payment. The “specific time” can be specified in different ways; There is no need to set a specific date. For example, a note could indicate that it is payable on or before a certain date, at a specified period after the date, at a time-determined period, at a specific time subject to acceleration, or at a specific time subject to renewal at the option of the holder, or automatically on or after the occurrence of a particular event.
