Negotiable Instruments: Endorsements, Guarantees, and Payments
Negotiable Instruments
Cancellation of Acceptance
Remains obligated to those who know of acceptance. Charges can be applied.
Endorsement
Concept
A cambiário act where the borrower transfers credit ownership.
Abstract Act
Endorsement is an abstract, formal, and unilateral act. It’s abstract because it’s detached from its motivating factors. It’s formal because it requires a signature on the document. It’s unilateral because only the endorser participates. Successive endorsements are possible.
Character
Transfers credit from endorser to endorsee.
Assignment “Pro Solve”
The endorser (original lender) remains legally responsible for payment. They become sympathetic obligors and may be required to pay if the creditor defaults.
Prohibition of Further Endorsement
An endorser can prohibit further endorsements. This doesn’t prevent the endorsee from endorsing, but it releases the original endorser from further responsibility. This clause must be included in the endorsement.
Types of Endorsement
Blank Endorsement
Only the endorser’s signature, without indicating the new lender.
Full Endorsement
Indicates the new lender’s name.
Endorsement Categories
Proper Endorsement
Transfers the credit.
Improper Endorsement
Transfers ownership of the title but not the right to claim the represented credit.
Deposit Endorsement
Further details needed.
Mandate Endorsement
Further details needed.
Aval (Guarantee)
Concept
A cambiário act guaranteeing obligations represented by a negotiable instrument. Drawer, drawee, maker, endorser, guarantor, or anyone else can be the endorsee.
Autonomous Act
The Aval is autonomous; the guarantor’s obligation is independent of the endorsed obligation’s validity. A void endorsement doesn’t invalidate the Aval.
Applicable Parties
Anyone, including drawer, drawee, and endorsers.
Full or Partial Aval
Permitted by the Uniform Law, allowing guarantees for the whole or part of the obligation.
Early Endorsement
Endorsement before the drawee’s refusal to accept. Renumbered as obligors.
Posthumous Aval
Given after the due date.
Simultaneous Aval
Two or more people guaranteeing the same obligation. A paying guarantor can claim from other guarantors, but only their share if claiming from a co-guarantor.
Successive Aval
Guarantor of a guarantor. A paying guarantor can claim from the guaranteed guarantor.
Blank and Overlapping Endorsements
Blank Aval and endorsement without indicating the beneficiary assumes endorsement of the principal.
Supreme Court Ruling
Blank and overlapping endorsements are considered simultaneous.
Maturity and Payment
Essential Element
Not considered an essential element of negotiable instruments, despite Article 1 of the Uniform Law.
Presentation for Payment
Direct Presentation
Presenting the instrument directly for payment without acceptance.
Deadline for Submission
Defined by the server (up to 1 year according to Uniform Law Article 34).
Loss of Claim
Missing the deadline loses the claim against obligors but not against the principal debtor.
Forbidden Presentation
Stipulated by the server.
Term of Right
Begins with acceptance or protest if undated, presumably the last day.
Due Date
Set by the server, either a specific date or a time from issuance.
Early Maturity
Triggered by refusal to accept or bankruptcy. Partial refusal only anticipates the refused portion.
“Not Accepted” Clause
Prevents acceleration of the instrument.
Presentation and Payment
On the maturity date or the next business day if the maturity date is not a business day.
Loss of Time
Loss of right to charge obligors, but not the principal debtor.
“Querables” Bonds
Negotiable instruments are quérables obligations, meaning the lender must seek the debtor for payment.
Types of Payment
Discharge
Payment by the principal debtor.
Recovery
Payment by an obligor who then recovers from others.
Intervention
Payment by a third party who subrogates the lender.
Payment Location
Indicated on the instrument, or the drawee’s location if not specified.
Partial Payment
Allowed by the Uniform Law. Refusal of partial payment loses the right to charge obligors but not the principal debtor.