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Fax autograph negotiation

hi guys and welcome to another episode of attorneys of bloggers law for the everyday laymen that they will take apart form the law of negotiable instruments and we'll be talking about negotiation and endorsement so if you like my videos and you want to see more please hit the subscribe button also please remember that this is only for educational purposes and it's not a substitute for proper legal advice or for studying and understanding alone okay so as I may have mentioned in my previous videos now there are three methods of transferring an instrument no not necessarily a negotiable instrument but any instrument there is issue the very first transfer of the instrument there is negotiation which applies to negotiable instruments and there is also assignment now as for the difference between negotiation and assignment as well as the definition of assignment itself I have talked about that already in my previous video okay so now let's just focus on negotiation as I may have explained before negotiation is simply the transfer of the instrument from one person to another in such a manner as to constitute the transferee the holder they're off he's been he is now the the transferee is now a holder okay and the holder is simply the payee or indoorsy who is in possession of the instrument or the bearer of the instrument with the right to collect the sungjoo on the instrument okay now we can have an instrument which is payable to order or payable to bearer and instrument payable to order is negotiated by endorsement okay coupled with delivery however please take note there can also be an incomplete negotiation of an order instrument okay as I said earlier the negotiable instrument can be if it is an order instrument can be negotiated by endorsement signing the name okay and if in case of special endorsement that the ignition off to whom it is endorsed no let's say to a and then signing by the endorser okay that is the endorsement or it can also be a blank endorsement my signature only No okay now coupled with delivery they endorsement in delivery for instruments payable to order but what is what is this incomplete negotiation of an order instrument No so this happens when the current holder let's say me no I transfer the instrument for value I get value for this without endorsing it I just gave it no okay in this case this transfer is not a negotiation but is a mere equitable assignment okay the transferee in the in other words simply gets the title of the transfer oh okay and he also gets an additional right to ask for my endorsement okay he can come to me and ask me to endorse it to him okay so in this case the transferee the person who receives this he is not a holder but he is a mere assignee and he acquires the instrument subject to the defenses are more available to priorities okay now in this case of an incomplete negotiation okay young man without endorsement okay the negotiation can only take effect negotiation will only happen if that transferee to whom I transfer this is able to get my endorsement and it is only from the time that he gets my endorsement that he becomes a holder okay now this is important okay because the the time of endorsement or negotiation know which was determined again by the time that he obtains my endorsement is it that is important because that will help us determine if is he is a holder in due course or not okay why that's even an example now let's say I transfer this for value to okay but there since there is no endorsement from me yet okay he is a mere assignee and before that if he acquires any knowledge of a defect on the instrument such as forgery insolvency whatever know if he has a knowledge of any defect on the instrument before he acquires my endorsement then he is not a holder in divorce and he does not get the right so far whether in due course why because the negotiation will only take effect after I have after he has obtained my endorsement okay okay so that's it for a payable to order but what about being able to better it's very easy I mentioned this earlier in my previous videos no instruments payable to bearer and negotiated by mere delivery endorsement is not necessary you can but it's not necessary an instrument payable to bearer will always be payable to bearer and can be negotiated by new delivery now let's talk about the more important matter no endorsement and what is endorsement as I said it is the writing of the name of the endorser okay the person endorsing on the instrument with the intent to either transfer the title or to strengthen the security of the holder by assuming a contingent liability I sign my name to assume a contingent liability for its future payment okay or both can be both I want to transfer title and I want to assume contingent liability on the instrument okay so endorsement is not only a mode of transfer but it is a contract you have to remember what I talked about in my previous videos that one of the characteristics of negotiability is the accumulation of secondary core drugs okay so except for the qualified in dorsal every endorser note to the instrument except for the qualified one is a new debtor for the terms on the face of the instrument okay and he gets an additional obligation in what obligation is this that if the instrument is dishonored by the person primarily by either non-acceptance or non-payment and if I am given notice if that endorser is given notice then he will be he will be liable and he will pay for the amount called instrument okay now the qualified endorser as i mentioned earlier is not necessarily liable for those for the terms of the instrument okay I'll be discussing that later on no but the qualified endorser will only be liable for the breach in his warranties okay I'm saying not really on but I'll discuss that more in a bit okay so let's give a follow let's give a few rules on endorsement know first the endorsement must be of the entire instrument okay entire instrument except if part of the instrument has already been paid then the remainder whatever is left now can be indoors okay it may be endorsed as to the residue okay now if in the indoor let's say it's not being paid no it's still full you know if the endorsement transfers only part let's say this one in this case is 1000 no if the endorsement answer is only part no I sign pay to a or order only 500 that's not a negotiation that's a mere assignment because again the role is endorsement must be of the entire instrument okay also take note no and endorsement which transfers the negotiable instrument to two or more persons no okay severally meaning separately or individually such as here again 1000 then I say pay to a 800 pay to be 200 no I divided the 1000 into different portions for the two people that is not allowed okay that is not a negotiation okay however if the endorsement is quaint now if I say pay to X and why that one is a valid negotiation okay now let's go to the second rule in connection with that know if the endorsement is joined know made to X&Y okay are payable to the order of two or more pace or endorses who are not partners every one of them must indoors so if I say pay to a and B now when a and B have this note and they want to endorse it they have both of them have to sign they both of them have to endorse it further okay cannot be only one of them unless they are partners or unless the one endorsing has authority from the other person or other persons if Florida no next rule you know if a person is endorsing in a representative capacity like an agent no he may endorse in such terms as to negate his personal liability okay so he won't be like held liable on the instrument because he's only acting as a representative no so he just has to add words describing himself as agent like a common agent he must disclose his principal four principal eggs no and he his powerless agent must be he must be duly authorized in writing he must have an espy Haley okay now first we will know if the negotiable instrument is drawn or endorsed to a person as cashier or other fiscal officer of a bank or corporation the instrument is deemed prima facie only prima facie payable no to the bank or corporation of which he is an officer and it may be further negotiated by endorsement of the bank or corporation or even of the officer okay but that is only a disputable presumption and it may be proven by the cashier or Fiscal Officer that the instrument was negotiated to him or endorsed to them in their personal capacity meaning that they are the ones really entitled to the instrument okay now finally we'll okay in case the name of the payee or the endorsing is misspelled okay when he endorses it further notice one else he may add his proper name or signature okay if he just thinks fit no he it's not a mandatory rule on his part if he wants he can correct the name well let's go to the classification of endorsements so first we have the special endorsement okay and a special endorsement is simple it specifies the person to whom or to whose order the negotiable instrument is to be payable okay in other words I just say to a or to X that is already a special endorsement okay and in order for that negotiate for that instrument to be negotiated further then that person who especially named has to sign it as an endorser okay so he must endorse X or ay in the previous example must endorse it in order to further negotiate the instrument okay and that is especially true for order instruments but when it comes to better instruments or those payable to bearer it does not matter why because an instrument payable to bearer is always payable the better even if endorsed especially so it can be negotiated by me delivery okay so take note of that no next kind of endorsement is a black endorsement and what is a black endorsement if the special one names someone in particular like 2x in black it's just the signature of the endorsers there is no 2 X 2 y 2 0 1 okay just signature and then I give it to someone okay now that's easy for payable to bearer because payable to bearer instruments are can be negotiated by mail delivery and just give it to this person then he gives it to someone else just by delivery know even if you don't sign doesn't matter ok but in case of an instrument payable to order ok you can convert that instrument be able to order into one that is payable to bearer how by making a blank endorsed okay so let's say the first endorsement is special to a okay so that's a special endorsement if a wants to negotiate it to be you can do it either by specially endorsing saying to be signed a or you can just sign it without designating to whom it is being endorsed to he can just sign his name signed a without saying to be okay so that is a blunt endorsement okay so you now that block endorsement okay remember the signature okay the black endorsement is the effect is to make that instrument payable to bearer and can you can can you convert that bearer instrument into a special endorsement no can you convert rather that black endorsement to a special endorsement of course no if a merely signed his name without designating B then we can write over the signature to be okay he can now protect himself okay he can write any contract that is not inconsistent with endorsement to him what does not mean no that's simple being is allowed if it was negotiated to be by just the signature of a began right to be then over the signature of a okay but what cannot what can be cannot right now to be comma demand we've okay or protest waived or any other character which I did not say okay a can only be bound by what he actually promised no and the only thing he promised in that case was that is transferring the instrument to be okay so just remember if it's a better instrument it is a negotiable by mail delivery and even if it's specially endorsed okay once a bearer instrument always instrumental next kind of endorsement is the absolute endorsement okay in this case the endorser simply binds himself to pay or no other condition than the failure of prior parties to pay and Anjou notice of such failure of course there must be notice of this owner for non acceptance or non-payment okay so next kind of endorsement is the conditional endorsement okay take note a conditional endorsement okay because if the instrument itself is conditional okay then it's not negotiable because remember one of the requisites for a negotiable instrument is that it must contain an unconditional order or promise to pay they associated in money etc no but it must be unconditional but the endorsements on the back in the negotiation of the instrument it may be subject to a condition okay now the right of the indoorsy or the person receives the instrument is now made to depend on the happening of the condition okay now let's talk about the liabilities of the parties now the party primarily liable know like the maker or the drawee in case he accepts in which case he will be the acceptor he can pay and disregard the condition okay he doesn't have to wait for the condition to happen why because he has the right to terminate his obligation upon maturity of the instrument people are some problem on oh he will disregard the condition and now what will what will only happen is that the endure see they are the holder rather the person who receives the payment will now have to hold those funds subject to the condition and if the condition does not happen the funds that he held in trust must now be remitted to the person who endorsed the instrument to him okay so let's say maker to pay then payee endorses to aid and to be okay when I endorse it to be it was a conditional endorsement and let's say the holder CB once the maker to pay okay the maker can actually pay right away after maturity after after maturity in order for him to terminate all his obligations but if the condition does not happen then the payment received by B which was held in trust should now be given to a because the condition did not happen okay if that is the case in the example okay so let's go to the next kind of endorsement we have the restrictive endorsement okay and the restrictive endorsement can come in three forms now first one that prohibits the further negotiation of the instrument and in this case learning the instrument is no longer negotiable okay it can no longer be negotiated further second case is a restrictive endorsement which constitutes the endorsee as the agent of the endorser okay this is otherwise known as an endorsement for deposit okay he just holds it for the endorser and finally an endorsement is restrictive if it vests title in the indoor sea in trust or for the use of any other person or persons okay now in the mere absence of words implying the power to negotiate okay absentia mere absence of words implying power to negotiate doesn't make the endorsement restrictive okay it has to be clear the restrictive nature has to be clear and how do we know it he'll give you some examples if the endorsement is simply paid to a then that is all right no problem no but if it says paid to a only then the only mix in a specified person paid to only and now the instrument is non-negotiable okay so the effect of a restrictive endorsement is to give the endorsee certain rights okay first he can receive payment on the instrument he can bring any action the endorser could bring and he can transfer his rights as indoor sea the form of the endorsement allows him to and in this regard please take note of the rule of continuation of negotiable character okay once an instrument is initially negotiable when it was made it was negotiable it will continue to be negotiable until it is restrictively endorsed by prohibition or if it is finally discharged okay okay I'll talk about that more later no now let's go to the next kind of endorsement we have the qualified endorsement okay and they qualified the endorsement as the name implies means that the endorse are makes a qualification okay the effect here is that the endorser is now a mere assign or of title of the instrument is only an assign order okay how do we make a qualified endorsement no you just add words which are similar to sons recourse without recourse endorser not holder or at with nurseries okay that or similar words no and all these things just mean without a resort to the person secondarily liable meaning you cannot run after him you cannot hold that specific person who wrote those words liable okay in case of default of the person primarily liable okay now this qualified endorsement it's usually resorted to or use no in case the endorser the person who makes the qualification wants to transfer his title but he does not want to assume responsibilities under the secondary contracts okay remember the characteristic of negotiability is accumulation of secondary contracts let's say the endorser does not want to be held liable on that then he just makes a qualified endorsement okay now a qualified the endorser has only limited liability remember no he is a mere assignor so his only liability is the liability for breach of warranty if the instrument is this dishonoured nom either non-acceptance or non-payment due to the following cases no breach of warranty he is liable in case of forgery why because the warranty as the genuineness of the instrument is breached okay warranty he is liable in case he does not have good title no because he breaches the warranty of good title he is liable in case of lack of capacity to endorse of prior parties parties who came before him no he is also liable finally in case the instrument is valueless or not valid and he knew okay he knew if the qualified endorser knew of the fact that the instrument was valueless or not valid okay okay so you know I'll give an example you know if the maker know the person primarily liable if the maker refuses to pay because his signature was furnished okay I don't want to pay that's not my signature now if the maker says that then can the quarter qualified investor be held liable yes because he warrants that the instrument is genuine but if the maker cannot pay because he is insolvent and the qualified endorse I did not know about the insolvency then he is not liable to pay okay because again he assumes no liability other than for the breach of warranties which I mentioned earlier okay okay now please take note also know one of the effects of a qualified endorsement is that the qualified endorsement does not impair the negotiability of the instrument okay it is still negotiable even if there is a qualified endorsement okay the subsequent holder can negotiate it further and finally the qualified endorser is liable to all parties who derive their title through his endorsement okay for the breach of warranties course okay now next kind of endorsement would be enjoying endorsement and we discussed this already in passing and just as a reminder if an endorsement is payable to the order of two or more persons then all of them must indoors okay except if they are partners or if the payee or endorsing has authority to endorse for the author they finally we have the irregular endorser okay take note this happens before delivery know if a person who is not otherwise party to the instrument places their signatures their own in blank okay before delivery then he is considered to be an endorser in fact an irregular endorser okay now take note of the rules now if it is payable to the order of a third person then he is liable to the payee and all subsequent parties if it is payable to the order of the maker or drawer or if it is payable to bearer then the irregular endorser is liable to all parties subsequent to the maker or drawer and finally in case the irregular endorser signs for accommodation of the payee is liable to all parties subsequent to the payee okay now let's go to some more rules okay actually these are presumption so first presumption as to the time of endorsement now why is this important not the presumption as to the time of endorsement it's important because for a holder to be considered a holder in due course he must have taken the instrument before it was overdue meaning it's not part it's maturity date it's not past it's due date okay so the general rule is negotiation is the prima facie case of disputable presumption negotiation is the Prima fatty who have been affected before the instrument was overdue that's the presumption exception if the endorsement K bears a date after maturity of the instrument and under section 11 if the endorsement bears a day that is presumed to be that Jude the true date rather the true day not dude a true day okay now next presumption presumption as to the place of endorsement this is simple now every endorsement is presumed to me to be made at the place where the instrument is dated so if there appears a date then there's a place Manila then the endorsement is also presumed to be done at Manila okay except of course where the contrary appears the endorser writes a specific place that's also the rule not P so if there's a specific place written then we follow that if none we presume it to be at the place where the instrument is okay now let's go to a very important and a bit complicated matter you know let's talk about the striking out of endorsements okay now the rule is in case of many endorse endorses and endorsers know ABCD efg whoever no there is okay there are cases when endorsements may be stricken off yeah but let's talk about the rule first no the holder may at any time strike up any endorsement which is not necessary to his title take note no and endorse he will derive his title through the person from whom he derived it in case of a better instrument it does not matter because it's by mail delivery but in the case of an order instrument or special endorsements you can trace it from home near title is derived from okay so in case that the title of certain endorsers are not necessary to your own title you can strike them off meaning you can delete them nor cross them out okay so the indoor circus endorsement is stuck out or erased or deleted no and all endorsers who subsequent to that persona so let's say c d e f g no g wants to strike out C to F no not only see but also EF g EF know everyone subsequent to they are also relief from liability on the instrument okay now take know if the instrument is negotiated by special endorsement meaning to a northern signature if the instrument is negotiated by special endorsement the holder has no right to strike out such endorsement okay he came up strike out not endorsement nor can he convert that special endorsement to implant endorsement why it will be stupid for him to do that why because remember I just said earlier you have to be able to trace your title in case of special endorsements now if you're ABCDE you have to be able to say I got it from a I got it from these C B etc no you have to follow that in case there is an intervening black endorsement so you cannot cross those out okay because otherwise the maker will not draw me or the person primarily liable will not know how you got that title in case of special endorsements huh but in case of black endorsements or better instruments that's not such a big problem because that's negotiable maybe a delivery okay so what are the cases when the holder may strike out an endorsement okay first the holder may strike out an endorsement if it is payable to bearer on its face I mentioned this earlier repeatedly no why because if this is a better instrument I can simply negotiate this by me delivery I can start out any and all instruments why because all I have to rely on is what is written on the face it says payable to a let's say X or Bearer there are learning dating ago only better and I am the bearer so you will now pay me any title here in the back it does not matter to me okay it's none of them are necessary to my title okay but now here comes the more important rule if this is an instrument originally payable to order pay and instrument payable to order is negotiable it's negotiated by endorsement coupled with delivery and you can only strike out in the endorsements in two phases first when it is reacquired by a prior by D okay so meaning someone a prior party has received the instrument again through negotiation phase of the rule is where an instrument is negotiated back to a prior party such party major issue and further negotiate the same but he cannot enforce payment thereof against any intervening party to whom he was personally liable why because with respect to prior by this he is remitted to his former position so since he is already in his formal position he can strike out his own and any subsequent endorsements because they are not necessary to his tight end okay so let's give an example No so let's say here see Kung Fu Panda Kung Fu Panda makes the instrument of negotiable instrument payable to the Cheng Goku KPC to go COBOL order okay Goku now negotiates it to go hon okay and go hand two trunks and trucks now negotiate said to Vegeta so far there are how many people already 1 2 3 4 5 ok vegetal ok vendetta now renegotiates the bill took Gohan he wants to pay his death to go on and he uses that instrument and Gohan exception okay so now Gohan receives the instrument or rather reacquires the instrument okay Gohan can further Lina go she ate the bill and now let's say he renegotiates the bell to Freeza Freeza is now the current holder Freese asks Gohan to pay and let's say Gohan penis okay now what water is the rights liabilities Gohan okay Gohan cannot claim payment from either drugs or vegetal he cannot claim payment from there why because if Gohan asks for payment from vegetal trunks because remember he got his title again here li acquired the title from veggie bono if he had asked Vegeta and trunks to pay no then they will simply ask him to pay it back why because they in turn derived their title from Gohan okay remember the the situation went confer Panda Goku Gohan trunks then vegetal okay so in the order of preference no they will go on will be liable to trunks and to register so if he holds them liable okay they can hold him liable again see how a circuit with circuit circuit to us that is no it goes around in circles now this is to prevent multiplicity of suits so the law just says that if Gohan reacquires it from a subsequent indoor see then he now cannot hold them liable anymore okay who can go and run after he can run after the maker who is the painful Panda or he can hold the original payee Goku liable okay so okay what about Frieza can Frieza enforce payment from parties he can enforce payment from any one of them okay think not anyone the problem is really with Gohan okay so remember when I mentioned earlier that tracks and Vegeta they cannot we cannot go home cannot claim payment from trunks and Vegeta and since originally trunks and vegetal derive their title through Gohan and the since Gohan was importantly acquired a bill no then trunks and Gohan hey trucks and vegetal no longer necessary Gohan can strike out the endorsements of trunks in okay because he is limited to his formal position where he obtained his title from who okay so that's how the rule works okay final note if Gohan does strike out trunks and Vegeta as I said earlier he can do that remember he will strike up the endorsements to trunks and veggie patch then Frieza can no longer hold trunks and vegetal I was it's as if they have been removed from the instrument already okay and finally take note a prior party cannot renegotiate the instrument first if it is payable to the order of a third person and it is paid by the drawer second if it is made or accepted for accommodation and it is paid by the accommodated party and finally if the instrument is discharged now these rules are under the final one is under one one nine and the first two are under one two one a and B okay so just take note of that okay now let's move on the second rule when the second instance when the endorsements will be stricken off in case of an instrument payable to order a second is when the order instrument becomes a bearer instrument okay remember how does an order instrument become a better instrument if the only or the last endorsement is in black meaning that is no there is nothing written at 2a or 2x nothing it's only a signature okay so when the black endorsement is now followed by a special endorsement and the holder strikes of all the endorsements subsequent or after the blank endorsement then the instrument now becomes payable to bearer they can be now negotiated by mail delivery why because the last endorsement is in black okay in the other world special endorsements are not necessary to the holders title came because he could have he could have acquired the same through mere delivery okay however please say no this is very important the endorser may not strike out the payees endorsement okay why because the instrument is payable to order in this case and the endorsement of the payee is necessary for the instrument to have been negotiated in the first place okay so payee must especially indoors and then it can be endorsed and blocked by that subsequent indoorsy and everything after that can now be crossed out okay so it will be as if the holder with the ripeness title from the blank endorsement okay so that's it not for negotiation and transfer please just remember also the rule of continuation of negotiable character that's very important an instrument if it is originally negotiable continues to be negotiable until either restrictively endorsed by a prohibition of further negotiation or when finally discharged okay so I hope you may have picked up a single two in a please stay tuned for my next video okay see you soon guys bye