MECHANICALLY INCOMPLETE BUT DELIVERED INSTRUMENTS

CONCEPT/NATURE An instrument which is wanting in a material particular such as the amount of the instrument, and it is delivered to another for him to fill the blank or blanks and negotiate it either for his own benefit or that of the person making the instrument. EFFEECTS The person in possession of an instrument wanting in any material particular has a prima facie authority a. to fill up the blank by placing the amount or due date b. to fill up the instrument for any amount - this prima facie authority exists when there is a signature on a blank paper and the person who signed the instrument in blank delivers it to another in order that it may be converted into a negotiable instrument REQUISITES IN ORDER TO HOLD A PERSON LIABLE ON THE INSTRUMENT a. The blank must be filled up strictly in accordance with the authority given. b. The same must be filled up within a reasonable time RIGHTS/OBLIGATIONS/LIABILITIES OF PARTIES in case of wrongful completion a. Holder in due course He can enforce the instrument as if it had been filled up strictly in accordance with the authority given and within a reasonable time against: - the parties prior to the wrongful completion, - the party guilty thereof, and - the parties subsequent to the wrongful completion b. Holder not in due course He can enforce the instrument as completed against: - the party guilty of the wrongful completion, and - the parties subsequent thereto. However, he cannot enforce the instrument against prior parties. OTHER CONCEPTS The law speaks of material particular (Sec 125). It may be defined as any particular proper to be inserted in a negotiable instrument to make it complete, and the power to fill in the blanks extends, therefore, to every complete feature of the instruments

MECHANICALLY INCOMPLETE AND UNDELIVERED INSTRUMENTS

CONCEPT/NATURE An instrument which is wanting in a material particular such as the amount of the instrument or the name of the payee, and it is undelivered. EFFECTS If completed and delivered without authority, the instrument shall not be valid in the hands of any holder, as against any person whose signature was placed thereon before delivery. REQUISITES IN ORDER TO HOLD A PERSON LIABLE ON THE INSTRUMENT N/A RIGHTS/OBLIGATIONS/LIABILITIES OF PARTIES If completed and delivered without authority

a. as against a party whose signature was placed on the instrument before delivery - He cannot be held liable because want of delivery of an incomplete instrument is a real defense. hence, even if the holder in due course, the latter cannot enforce the instrument against him b. as against a party who signs the instrument after completion and delivery - The instrument can be enforced against the guilty party, i.e., the one who completed and delivered the instrument, as well as those subsequent to him. For indorsers or persons negotiating by mere delivery, they warrant that the instrument is genuine and in all respects what it purports to be . OTHER CONCEPTS It is a real defense. The defense of a party signing the instrument prior to its delivery that is not valid for having been incomplete and undelivered is a real or absolute defense. Any holder which includes a holder in due course is a real defense.

MECHANICALLY COMPLETE BUT UNDELIVERED INSTRUMENTS

CONCEPT/NATURE a. An instrument which is complete in form but not delivered b. Every complete instrument must be delivered c. Before delivery, such instrument is revocable d. The delivery must be authorized e. If properly authorized, the delivery as against parties who know, may be shown to have been made conditionally or for a special purpose f. Where the instrument is no longer in the possession of a party whose signature appears thereon, delivery by him is disputably presumed g. In letter f above, it can be shown by evidence that there was no delivery or that the bill or note was stolen h. If the instrument is in the hands of a holder in due course, a valid delivery is conclusively presumed and prior parties may therefore be held liable. EFFECTS - A bill or note is incomplete and revocable until there is a valid delivery. - Before delivery, the maker or drawer can revoke, cancel or tear up the instrument REQUISITES IN ORDER TO HOLD A PERSON LIABLE ON THE INSTRUMENT When delivery presumed a. against a holder not in due course where the instrument is no longer in the possession of a party whose signature appears thereon, a valid and intentional delivery by him is presumed until the contrary is approved b. against a holder in due course where an undelivered complete instrument is in the hands of a holder in due course, there is a conclusive presumption of delivery and consequently lack of delivery is not available as a defense against him RIGHTS/OBLIGATIONS/LIABILITIES OF PARTIES a. If the holder is not a holder in due course, and the instrument is delivered without the authority of the party sought to be charged he is not liable b. If the holder is not a holder in due course a valid and intentional delivery by all prior parties is conclusively all parties are liable to the holder OTHER CONCEPTS Delivery of an instrument need not be actual, it may be constructive. Depositing a note by mail with intent to transmit it to the payee in the usual way is a delivery in contemplation of law.