Professional Documents
Culture Documents
Negotiation – the transferee has the POTENTIAL to acquire a better right or title than his
transferor. The transferee will not be subject to the defenses set up by prior parties. (see Puget
Bank v. Washington Paving Co.) Negotiation is a species of transfer.
Assignment – the assignee merely “STEPS INTO THE SHOES” of the assignor and cannot have a
better right than the latter. The assignee is open to all the defenses available against the assignor.
Things to establish:
1. That the instrument is negotiable.
-if it complies with the requisites.
Sec. 5
DAY 6
Bedrock/hierarchy/layers of negotiable instruments
1. Establish requisites
2. Negotiation
3. Holder in due course
Payee is too close to the maker preventing him from being a holder in due course.
Indorsing a bearer instrument – added layer of security. Endorser assumes greater liability.
Transfer of a negotiable instrument which has a restriction as to its further negotiation would be
merely an assignment.
Presentment – when the negotiable instrument is presented by the holder to the drawee.