palani
30th August 2011, 09:31 AM
Rules for Writing, Collecting and Transferring Notes
1. A written agreement signed by one person to pay another at a fixed time a stated sum of money is called a note.
2. The person who promises is called the maker and the one whom he promises is called the payee.
3. If the words ORDER or BEARER are omitted the note is not transferable.
4. Paper payable to bearer is transferred by delivery, payable to order by indorsement.
5. Outside evidence cannot change the time of negotiable paper.
6. He who makes the note is the first debtor, and the indorsers are held conditionally liable.
7. The face of a note is the sum for which it is given.
8. A note given by one who cannot write should be witnessed.
9. A note destroyed by fire can be collected by sufficient proof.
10. If no time is specified the note is payable on demand.
11. A note obtained through fraud in the hands of an innocent party who has acquired it in good faith may be collected.
12. Always write the name of the place and state, as it is just as important as the date.
13. A note made in one state, payable in another, must be governed by the laws of the state in which it is to be paid.
14. The signatures on a note or bill need not be proven, unless it is first denied under oath.
15. One who receives a note (knowing it to have defects) gets no better right to collect it than the one from whom he received it had.
16. If a person at the time of taking a note has notice that it is void throught fraud, or upon any legal grounds, he cannot collect it.
17. Notes are made payable to BEARER or ORDER.
18. A note as a gift is void for want of consideration.
19. A note is void when founded upon fraud.
20. A note made by an intoxicated person or minor is void.
21. A signature written with a lead pencil is valid.
22. Money paid under mistake must be refunded.
23. A note made on Sunday is void in some states.
24. Upon presentment for payment and refusal by maker at maturity, the note should be protested by a Notary Public.
25. Changing the date, amount, time of payment, or any other alterations in a note, releases all parties from liability who have not consented thereto.
26. An extension of the time of a note by holder releases sureties and indorsers.
27. A note given by one who is not of age cannot be collected by law. If the minor ratifies after becoming of age, it becomes valid.
28. An indorser can avoid liability by writing "without recourse" on the back of the note with his signature.
29. All the parties who have written their names on a note are liable for the amount due but only one satisfaction can be recovered.
30. When a note says I PROMISE, but is signed by two or more parties, each signer is bound for the full amount, and either or all may be sued.
31. When several persons unite in a note and say WE PROMISE or WE JOINTLY PROMISE, it is a joint liability only, and all must be sued; but if they say WE OR EITHER OF US PROMISE, or WE JOINTLY AND SEVERALLY PROMISE, the liability is both joint and several, and either or all may be sued.
32. Evidence is allowed in correcting a mistake made in stating the amount.
33. Days of grace are allowed in all states excepting California, Idaho, Oregon, Illinois, Wisconsin, Indiana and New York.
34. Demand for payment of a note must be made upon the last day of grace; if that day is a Sabbath or a holiday, demand must be made on the day previous.
35. The words VALUE RECEIVED are not required by law and can be safely omitted. The law always presumes value was received until evidence is shown to the contrary.
36. Negotiable paper, payable to bearer, or indorsed in blank, which has been stolen or lost cannot be collected by the thief or finder; but a holder who receives it in good faith before maturity for value can hold against the owner's claim.
37. To make the indorser of a note responsible the note must be presented and payment demanded of the maker on the very day when it becomes due. If payment is refused notice must be given to the indorser or indorsers.
38. A negotiable note must contain five things:
1. That the date of payment be certain to come.
2. That it have one of the two words ORDER or BEARER.
3. That the amount be specified and certain.
4. That it be payable in money only.
5. That it be an unconditional promise.
39. If WITH INTEREST is included in the note, it draws the legal rate of the state where it is given from the time it is made.
40. If the note is to draw a special rate of interest higher than the legal, but not higher than the law allows, the rate must be specified.
Above from LAW and LEGAL POINTERS A COMPLETE INSTRUCTOR AND ADVISOR BY J Edward Heidner.
Consider item (3):
3. If the words ORDER or BEARER are omitted the note is not transferable.
A Federal Reserve note is reputed to be a note (says so doesn't it). Nowhere does the note contain the words ORDER or BEARER. I would guess that the FRN is not transferable.
How does it come to pass that I see them transfered all the time?
1. A written agreement signed by one person to pay another at a fixed time a stated sum of money is called a note.
2. The person who promises is called the maker and the one whom he promises is called the payee.
3. If the words ORDER or BEARER are omitted the note is not transferable.
4. Paper payable to bearer is transferred by delivery, payable to order by indorsement.
5. Outside evidence cannot change the time of negotiable paper.
6. He who makes the note is the first debtor, and the indorsers are held conditionally liable.
7. The face of a note is the sum for which it is given.
8. A note given by one who cannot write should be witnessed.
9. A note destroyed by fire can be collected by sufficient proof.
10. If no time is specified the note is payable on demand.
11. A note obtained through fraud in the hands of an innocent party who has acquired it in good faith may be collected.
12. Always write the name of the place and state, as it is just as important as the date.
13. A note made in one state, payable in another, must be governed by the laws of the state in which it is to be paid.
14. The signatures on a note or bill need not be proven, unless it is first denied under oath.
15. One who receives a note (knowing it to have defects) gets no better right to collect it than the one from whom he received it had.
16. If a person at the time of taking a note has notice that it is void throught fraud, or upon any legal grounds, he cannot collect it.
17. Notes are made payable to BEARER or ORDER.
18. A note as a gift is void for want of consideration.
19. A note is void when founded upon fraud.
20. A note made by an intoxicated person or minor is void.
21. A signature written with a lead pencil is valid.
22. Money paid under mistake must be refunded.
23. A note made on Sunday is void in some states.
24. Upon presentment for payment and refusal by maker at maturity, the note should be protested by a Notary Public.
25. Changing the date, amount, time of payment, or any other alterations in a note, releases all parties from liability who have not consented thereto.
26. An extension of the time of a note by holder releases sureties and indorsers.
27. A note given by one who is not of age cannot be collected by law. If the minor ratifies after becoming of age, it becomes valid.
28. An indorser can avoid liability by writing "without recourse" on the back of the note with his signature.
29. All the parties who have written their names on a note are liable for the amount due but only one satisfaction can be recovered.
30. When a note says I PROMISE, but is signed by two or more parties, each signer is bound for the full amount, and either or all may be sued.
31. When several persons unite in a note and say WE PROMISE or WE JOINTLY PROMISE, it is a joint liability only, and all must be sued; but if they say WE OR EITHER OF US PROMISE, or WE JOINTLY AND SEVERALLY PROMISE, the liability is both joint and several, and either or all may be sued.
32. Evidence is allowed in correcting a mistake made in stating the amount.
33. Days of grace are allowed in all states excepting California, Idaho, Oregon, Illinois, Wisconsin, Indiana and New York.
34. Demand for payment of a note must be made upon the last day of grace; if that day is a Sabbath or a holiday, demand must be made on the day previous.
35. The words VALUE RECEIVED are not required by law and can be safely omitted. The law always presumes value was received until evidence is shown to the contrary.
36. Negotiable paper, payable to bearer, or indorsed in blank, which has been stolen or lost cannot be collected by the thief or finder; but a holder who receives it in good faith before maturity for value can hold against the owner's claim.
37. To make the indorser of a note responsible the note must be presented and payment demanded of the maker on the very day when it becomes due. If payment is refused notice must be given to the indorser or indorsers.
38. A negotiable note must contain five things:
1. That the date of payment be certain to come.
2. That it have one of the two words ORDER or BEARER.
3. That the amount be specified and certain.
4. That it be payable in money only.
5. That it be an unconditional promise.
39. If WITH INTEREST is included in the note, it draws the legal rate of the state where it is given from the time it is made.
40. If the note is to draw a special rate of interest higher than the legal, but not higher than the law allows, the rate must be specified.
Above from LAW and LEGAL POINTERS A COMPLETE INSTRUCTOR AND ADVISOR BY J Edward Heidner.
Consider item (3):
3. If the words ORDER or BEARER are omitted the note is not transferable.
A Federal Reserve note is reputed to be a note (says so doesn't it). Nowhere does the note contain the words ORDER or BEARER. I would guess that the FRN is not transferable.
How does it come to pass that I see them transfered all the time?