Transfer of a Negotiable Instrument - Explained
Transferring Commercial Paper between Holders
If you still have questions or prefer to get help directly from an agent, please submit a request.
We’ll get back to you as soon as possible.
- Marketing, Advertising, Sales & PR
- Accounting, Taxation, and Reporting
- Professionalism & Career Development
Law, Transactions, & Risk Management
Government, Legal System, Administrative Law, & Constitutional Law Legal Disputes - Civil & Criminal Law Agency Law HR, Employment, Labor, & Discrimination Business Entities, Corporate Governance & Ownership Business Transactions, Antitrust, & Securities Law Real Estate, Personal, & Intellectual Property Commercial Law: Contract, Payments, Security Interests, & Bankruptcy Consumer Protection Insurance & Risk Management Immigration Law Environmental Protection Law Inheritance, Estates, and Trusts
- Business Management & Operations
- Economics, Finance, & Analytics
Table of ContentsWhat is the transfer of commercial paper?Discussion QuestionPractice QuestionAcademic Research
What is the transfer of commercial paper?
An instrument is transferred when it is delivered by a person (other than its issuer) with the purpose of bestowing the right to enforce the instrument pursuant to its terms. Transfer vests in the transferee the rights of the transferor to enforce the instrument. While the transferee receives the rights of the transferor, it means the transferee may also be subject to any defenses the payor may have to payment of the instrument. That is, the transferee stands in the same position as the transferor with regard to the payors defenses against payment.
Note: As previously discussed, once transferred, the recipient of the bearer paper is a holder of the note. Even if the transfer is involuntary (inheritance or judicial order) or wrongful (theft of bearer paper), the individual in possession of the paper is a holder of the paper.
Next Article: Indorsement of a Negotiable Instrument Back to: COMMERCIAL PAPER
- How is commercial paper negotiated to a holder?
- What is Transfer of a negotiable instrument?
- What is Indorsement of a negotiable instrument?
- What are the various types of indorsement?
- Bank Endorsement
- Blank Endorsement
- Accommodation Endorsement
- Accommodation Endorser
What do you think about the mental intent necessary for transfer of an instrument? Why do you think the definition requires the intent to transfer the right to present and receive payment of the instrument?
Connie issues a promissory note that is payable to bearer. She gives the note to Todd. Todd then delivers the note to Judy. Do we have valid transfers of the instrument? What issues might Judy face in presenting the instrument for payment?