Negotiation of Negotiable Receipt by Delivery
Negotiation of Negotiable Receipt by Delivery
Negotiation of Negotiable Receipt by Delivery
the
> For the purpose of determining whether the transferee is a purchaser for
value in good faith without notice, the negotiation shall take effect as
of the time when the indorsement is actually made not at the time the
receipt
is
delivered
> Reason for the rule: negotiation becomes complete only at the time of
indorsement
WARRANTIES ON SALE OF RECEIPT
1.
That
the
receipt
is
genuine
2.
That he has a legal right to negotiate or transfer it
3. That he has knowledge of no fact which would impair the validity of the
worth
of
the
receipt
4. That he has a right to transfer the title to the goods and that the goods
are merchantable or fit for a particular purpose, whenever such
warranties would have been implied, if the contract of the parties had been
to transfer without a receipt of the goods represented thereby
INDORSER, NOT A GUARANTOR
> The indorsement of a receipt doesnt make the indorser liable for any
failure on the part of the warehouseman or previous indorser of the
receipt
to
fulfill
their
respective
obligations
NO WARRANTY IMPLIED FROM ACCEPTING PAYMENT OF A DEBT
> A mortgagee, pledgee or holder for security of a receipt who, in
good faith, demands or receives payment of the debt for which such
receipt is security, whether from a party to a draft drawn for such debt
or from any other person, shall not, by so doing, be deemed to represent or
to warrant the genuineness of such receipt or the quantity or quality of the
goods
therein
described
> In other words, the holder of a security who in good faith accepts payment
of a debt from a person doesnt warrant thereby the genuineness of the
receipt nor the quality or quantity of the goods therein described
WHEN NEGOTIATION NOT IMPAIRED BY FRAUD, DURESS, MISTAKE
> The validity of the negotiation of a receipt isnt impaired by the fact that such
negotiation was a breach of duty on the part of the person making the
negotiation, or by the fact that the owner of the receipt was induced by
fraud, mistake or duress to entrust the possession or custody of the receipt
to such person, if the person to whom the receipt was negotiated, or to a
person
to
whom
the
receipt
is subsequently negotiated paid value therefor, without notice of the
breach
of
duty,
fraud,
mistake
or
duress
EFFECT OF SUBSEQUENT NEGOTIATION BY SELLER, ETC.
> The purchaser, mortgagee, or pledgee of goods for which a negotiable
receipt has been issued, or of the negotiable receipt itself, has the duty to
require the negotiation of the receipt to him otherwise, his failure will
have the same effect as an express authorization on his part to the seller,
mortgagor, or pledgor in possession of such receipt to make subsequent
negotiation
> The subsequent purchaser must have taken the receipt in good faith and
for
value
in
order
to
acquire
a
better
right
INDORSEES RIGHT SUPERIOR TO VENDORS LIEN
> An innocent holder of a negotiable receipt has a better right to the
goods for which the receipt is given than the vendor who has a vendors lien
upon
such
goods
> Warehouseman isnt obliged to deliver or justified in delivering the
goods to an unpaid seller unless the receipt is first surrendered for
cancellation
HOW DO YOU ATTACH OR IMPOSE A LIEN OVER GOODS
COVERED BY A WAREHOUSE RECEIPT?
If it is not negotiable, the court would issue a writ of attachment. If it is
negotiable, the court should require the surrender of the receipt and
restrict further negotiations.
receipt
Jillian Gandingco | 1