Parties in a negotiation

The maker or drawer, the issuer and indorser

Definition:

a) Maker refers to the person issuing a promissory note

b) Drawer refers to the person issuing a bill of exchange
c) Issuer refers to the maker or drawer
d) Indorser refers to the payee or indorsee who has signed the instrument and delivered it
to another person.

Roles and responsibilities in negotiation

Maker/drawer Indorser
a) Ensure that the document is completed a) Delivery the instrument if bearer
and delivered instrument to the indorsee
b) Indorse and delivery the instrument to
the indorsee
 Indorse the whole of instrument
 Determine the mode of indorsement if special, blank, conditional, restrictive or qualified
 Put the words “without recourse or words of similar import” if the indorsement is qualified

Liabilities of maker/drawer/issuer in negotiation

Type of indorsement Liabilities

In a Special or blank indorsement  Full liabilities to the amount of the note
or bill.
 Acts as guarantor fort the payment of the
amount due
 Warrants for the breach of liabilities
In a Qualified indorsement (without recourse)  Does not guaranty payment by the
primary party.
 Liable if dishonoured by non-acceptance
or non-payment due to: a) Forgery, b)
lack of good tile to the instrument
indorsed, c) lack of capacity to contract
on the part of the prior parties and d) the
fact that the instrument was valueless or
not valid at the time of the indorsement
which fact was known to him
 Not liable if the reason of non-payment is
References:
The Negotiable Instruments Law
De Leon, H.S., De Leon, H.M., & Philippines (2016) The Philippine Negotiable Instruments law annotated. Publish and distributed by Rex
Bookstore.
 the insolvency of the person primarily
liable
In a restrictive indorsement  The indorsee has the right against the
indorsee to a) receive payment, b) bring
any action thereon that the indorser
could bring, and c) transfer his rights as
such indorsee, where from the
indorsement authorizes him to do so.
In a conditional indorsement  The party required to pay may disregard
the condition and proceed to pay

References:
The Negotiable Instruments Law
De Leon, H.S., De Leon, H.M., & Philippines (2016) The Philippine Negotiable Instruments law annotated. Publish and distributed by Rex
Bookstore.