Negotiable Instrument
I promise to pay A or order…
HIDC is free from PD
Transferee may acquire more rights – the
transferee does not only acquire a derivative title
but a clean title - free from information and
defects of prior tranferors
The solvency of the debtor is guaranteed by the
indorsers because they engage that the instru will
be accepted, paid, or both and that they will pay
if the instrument is dishonored.
Covered by NIL
Can be transferred by negotiation or by
assignment
Assignment of Credit
I promise to pay A…
No Holder in Due Course – subject to personal
defenses
If the title of the transferor is defective, the
transferee will also be defective
Vendor in good faith is responsible for the
existence and legality of the credits at the time of
the sale – not for the solvency of the debtor
Exception: (1) assumption of insolvency is
expressly stipulated (2) the insolvency was prior
to the sale AND of common knowledge
NIL does not apply
Can only be transferred by assignment
The transferee can never be a holder in due
course – only an assignee – subject to ALL
defenses available to prior parties