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transferee.

5. The indorsee or other transferee of any such instru- Liability of ment having the words aforesaid so printed or written thereon, shall take the same subject to any defence or setoff in respect of the whole or any part thereof which would have existed between the original parties:

6. Every one who issues, sells or transfers, by indorse- Penalty. ment or delivery, any such instrument not having the words "given for a patent right" printed or written in manner aforesaid across the face thereof, knowing the consideration of such instrument to have consisted, in whole or in part, of the purchase money of a patent right, or of a partial interest, limited geographically or otherwise, in a patent right, is guilty of a misdemeanor, and liable to imprisonment for any term not exceeding one year, or to such fine, not exceeding two hundred dollars, as the court thinks fit.

Negotiation of Bills.

tion of

31. A bill is negotiated when it is transferred from one Negotiaperson to another in such a manner as to constitute the bills. transferee the holder of the bill:

To bearer.

2. A bill payable to bearer is negotiated by delivery : 3. A bill payable to order is negotiated by the indorse- To order. ment of the holder completed by delivery:

indorse

4. Where the holder of a bill payable to his order trans- Without fers it for value without indorsing it, the transfer gives the ment. transferee such title as the transferrer had in the bill, and the transferee in addition acquires the right to have the indorsement of the transferrer:

liability avoided.

5. Where any person is under obligation to indorse a Personal bill in a representative capacity, he may indorse the bill may be in such terms as to negative personal liability.

B.E.A.

2

Requisites of a valid indorse

ment.

32. An indorsement in order to operate as a negotiation must comply with the following conditions, namely:

(a) It must be written on the bill itself and be signed by the indorser. The simple signature of the indorser on the bill, without additional words, is sufficient;

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An indorsement written on an allonge, or on a " copy of a bill issued or negotiated in a country where "copies are recognized, is deemed to be written on the bill itself; (b) It must be an indorsement of the entire bill. A partial indorsement, that is to say, an indorsement which purports to transfer to the indorsee a part only of the amount payable, or which purports to transfer the bill to two or more indorsees severally, does not operate as a negotiation of the bill;

(c) Where a bill is payable to the order of two or more payees or indorsees who are not partners, all must indorse, unless the one indorsing has authority to indorse for the others:

Misspelling 2. Where, in a bill payable to order, the payee or indorsee is wrongly designated, or his name is misspelt, he may indorse the bill as therein described, adding his proper signature; or he may indorse by his own proper signature.

Order of indorsement.

Special indorsement.

Con

ditional in

3. Where there are two or more indorsements on a bill, each indorsement is deemed to have been made in the order in which it appears on the bill, until the contrary is proved :

4. An indorsement may be made in blank or special. It may also contain terms making it restrictive.

33. Where a bill purports to be indorsed conditionally, dorsement. the condition may be disregarded by the payer, and pay

ment to the indorsee is valid, whether the condition has been fulfilled or not.

34. An indorsement in blank specifies no indorsee, and Indorsea bill so indorsed becomes payable to bearer:

:

ment in blank.

dorsement.

2. A special indorsement specifies the person to whom, Special inor to whose order, the bill is to be payable :

tion of Act

3. The provisions of this Act relating to a payee apply, Applicawith the necessary modifications, to an indorsee under a to indorsee. special indorsement :

of blank in

4. Where a bill has been indorsed in blank, any holder Conversion may convert the blank indorsement into a special indorse- dorsement. ment by writing above the indorser's signature a direction to pay the bill to or to the order of himself or some other person.

indorse

35. An indorsement is restrictive which prohibits the Restrictive further negotiation of the bill, or which expresses that it ment. is a mere authority to deal with the bill as thereby directed, and not a transfer of the ownership thereof, as, for example, if a bill is indorsed "Pay D only," or "Pay D for the account of X," or "Pay D, or order, for collection :"

indorsee

under.

2. A restrictive indorsement gives the indorsee the right Right of to receive payment of the bill and to sue any party thereto therethat his indorser could have sued, but gives him no power to transfer his rights as indorsee unless it expressly authorizes him to do so :

transfer is

3. Where a restrictive indorsement authorizes further If further transfer, all subsequent indorsees take the bill with the authorized. same rights and subject to the same liabilities as the first indorsee under the restrictive indorsement.

When ne

gotiable

to be so.

36. Where a bill is negotiable in its origin, it continues

bills ceases to be negotiable until it has been (a) restrictively indorsed, or (b) discharged by payment or otherwise;

Negotia

tion of overdue bill.

When bill deemed overdue.

Presumption as to negotiation.

Taking bill subsequent to dishonor.

Negotia

tion of bill to party already liable thereon.

Rights of the holder.

2. Where an overdue bill is negotiated, it can be negotiated only subject to any defect of title affecting it at its maturity, and thenceforward no person who takes it can acquire or give a better title than that which had the person from whom he took it:

3. A bill payable on demand is deemed to be overdue within the meaning and for the purposes of this section, when it appears on the face of it to have been in circulation for an unreasonable length of time; what is an unreasonable length of time for this purpose is a question of fact:

4. Except where an indorsement bears date after the maturity of the bill, every negotiation is prima facie, deemed to have been effected before the bill was overdue:

5. Where a bill which is not overdue has been dishonored, any person who takes it with notice of the dishonor takes it subject to any defect of title attaching thereto at the time of dishonor; but nothing in this subsection shall affect the rights of a holder in due course.

37. Where a bill is negotiated back to the drawer, or to a prior indorser, or to the acceptor, such party may, subject to the provisions of this Act, re-issue and further negotiate the bill, but he is not entitled to enforce the payment of the bill against any intervening party to whom he was previously liable.

38. The rights and powers of the holder of a bill are as follows:

(a) He may sue on the bill in his own name;

(b) Where he is a holder in due course, he holds the bill free from any defect of title of prior parties, as well as from mere personal defences available to prior parties among themselves, and may enforce payment against all parties liable on the bill;

(c) Where his title is defective, (1) if he negotiates the bill to a holder in due course, that holder obtains a good and complete title to the bill, and (2) if he obtains payment of the bill the person who pays him in due course gets a valid discharge for the bill.

General Duties of the Holder.

sentment

39. Where a bill is payable at sight or after sight, When prepresentment for acceptance is necessary in order to fix the for acceptmaturity of the instrument:

ance is necessary.

stipulation as to presentment.

2. Where a bill expressly stipulates that it shall be pre- Express sented for acceptance, or where a bill is drawn payable elsewhere than at the residence or place of business of the drawee, it must be presented for acceptance before it can be presented for payment:

3. In no other case is presentment for acceptance neces- No present sary in order to render liable any party to the bill:

ment in any other

case.

delay for

ment.

4. Where the holder of a bill, drawn payable elsewhere Necessary than at the place of business or residence of the drawee, presenthas not time, with the exercise of reasonable diligence, to present the bill for acceptance before presenting it for payment on the day that it falls due, the delay caused by presenting the bill for acceptance before presenting it for payment is excused, and does not discharge the drawer and indorsers.

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