Credit Titles: A Deep Dive
CREDIT TITLES
- Credits as Commercial Transactions: The issuance, endorsement, guaranty, acceptance, and other operations related to credits are duly recorded acts of commerce.
- These actions are considered commercial and transferable.
- Credits represent economic and commercial content; the document would not exist without the right or concept of debt.
Concept and Characteristics
- Necessary Documents: Credits are essential documents for exercising the literal right contained within them.
- Hallmarks of Credits:
- Incorporation: All credits embody an economic right. This right cannot be justified or exercised without presenting the credit title; they are inseparable.
- Legitimacy: This is the power or authority that grants the holder the right to demand payment as stipulated in the document.
- Literalism: The economic right to charge the obligor is based precisely on the document’s text, without interpretation, except as legally mandated.
- Autonomy: The holder or beneficiary can transfer their right to a third party, who acquires an independent right, separate from the previous holder. The obligor can raise the same exceptions or defenses against the new holder as they could against the previous one.
Classification of Receivables
- Nominated Titles: Specifically regulated by law and given a specific name (e.g., check, promissory note, bill of exchange).
- Unnamed Titles: Lack legal regulation and are created by usage and custom.
- Simple Titles: Represent a single economic benefit (e.g., promissory note, check, draft).
- Complex Titles: Incorporate multiple rights (e.g., stocks).
- Corporate Bonds: Issued by individuals (e.g., bills of exchange, checks, promissory notes).
- Government Securities: Issued by the state (e.g., bonds).
- Serial Titles: Created in series from a single act (e.g., stocks and bonds).
- Unique Titles: Created individually for each act of issuance (e.g., bill of exchange, check, promissory note).
- Debtor Titles: Grant credit.
- Payment Titles: Serve as payment instruments (e.g., checks).
- Nominative Debtor Titles: Issued in the recipient’s name (e.g., corporate shares).
- Order Debtor Titles: Issued to a specific person and transferred through endorsement and delivery (e.g., bill of exchange, promissory notes).
- Bearer Debtor Titles: Not issued to a specific individual and do not contain a bearer clause (e.g., cashier’s check).
Endorsement
Ancillary provisions inseparable from the title, by which the holder transmits property rights to another party for payment or guarantee.
Can be done in blank, with the endorser’s signature, transferring property rights.
Requirements for Endorsement:
- Endorser’s name
- Signature of the transferor or their representative
- Type of endorsement
- Place and date
“The endorsement part is null” (This statement requires further clarification.)
Endorsement can convey title for ownership, enforcement, or security.
- Ownership Endorsement: Transfers ownership and all inherent rights. The endorsee cannot raise personal exemptions against the endorser or previous holders.
- Enforcement/Collection Endorsement: The endorsement includes phrases like “in procurement” or “for collection.” It grants the endorsee the power to present the document for acceptance, cash it, endorse it for procurement, and protest it, but does not transfer ownership.
- Guarantee Endorsement: Includes clauses like “in warranty” or “pledge.” The endorsee receives all rights and obligations of a lienholder, including the powers of enforcement endorsement.
The endorsee is not obligated to accept personal defenses against the endorser.
Regular Endorsement: A contract transferring property and all rights in the credit title.