BU231 Lecture Notes - Lecture 8: Collateral Contract, Negotiable Instrument
Document Summary
Negotiability compared with assignability: negotiation is a special type of assignment in which the new holder of instrument acquires the rights which the instrument has to convey, payee may negotiate in two ways: If instrument is payable to bearer, he need only deliver it to third party (write cheque to andrew) A bartender is fired, but manages to get his paycheque which he cashes in the middle of the night at money mart. When the manager learns that the bartender has gotten his cheque, he immediately puts a stop order on it. Money mart is now stuck, forced to sue the bartender and employer. Defences of promisor: even when a promisor is induced to sign a negotiable instrument due to fraud, they still may be sued by a subsequent innocent holder who gives consideration for the instrument. If you take fraudulent cheque and pay someone with it, you become responsible for that money.
