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It is incumbent upon the person dealing with an agent to inquire into the agent's
authority since the principal is liable only if the agent acted within the scope of his
authority.
Lack of capacity such as being a minor/insane/deaf-mute is a real defense
forgery of an indorsement cuts off the indorser whose signature is forged and prior
parties from the claim of parties subsequent to the forgery, if the instrument is
payable to order. If the instrument is payable to bearer but nevertheless indorsed,
the holder can enforce the instrument against the indorser whose signature is
forged and against the prior parties
The liability of a person negotiating by mere delivery is only to the immediate
transferee.
The accommodation party is considered as solidary co-debtor. Any payment by
him shall be reimbursed by the party accommodated (principal) since he is the
surety.
In negotiation, presentment and notice of dishonor is required to make an indorser
liable. This is not needed in assignment.
Indorsement of an instrument must be in whole. Thus, it would not be a valid
indorsement if the transfer is for only a part of the amount payable.
Splitting the amount payable to 2 or more person is not a valid indorsement.
The indorser cannot add or include words inconsistent with the contract unless
authorized by maker.
Restrictive indorsement can either (1) prohibit the further negotiation of the
instrument, (2) constitutes the indorsee the agent of the indorser (3) make the
indorsee in trust for.
Even if qualified indorsement has without recourse, the indorser is still liable on
his warrranties.
The maker cannot be burdened with conditions which were not part of his
contract. Thus, he can pay the indorsee anytime he wishes even if the condition
imposed by the indorser is not yet fulfilled.
A person indorsing specially is liable only to holders who acquired title through
indorsement. If a person negotiates by mere delivery, he is only liable to the
immediate transferee.
Intervening parties enjoy a temporary defense while a prior party to the
instrument is the holder. If the prior party negotiates the instrument to a holder in
due course, the latter can go after intervening parties.
A holder in due course is similar to an assignee because he is subject to every
available defense.
Discharge of the instrument before maturity is a personal defense while discharge
at or after maturity is a real defense.