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title is transferred to the buyer, after which the risk is the buyer's whether delivery has been made or not. The question of title often hinges on delivery. When delivery has been delayed, the rule differs in different States; in some, the party at fault suffers the loss, in others not. In many cases, title passes on acceptance of the goods and receipt is not necessary; in other cases, receipt also may be specified. Shipments specified to be “at buyer's risk" are, nevertheless, held to be at seller's risk if the latter is also the shipper and if improper methods of shipment or defects in cars or vessels are the cause of the damage; but not if he is the seller only, without control over the shipment.
Conditional Sales. In the case of conditional sales, if title is reserved in the seller as a matter of security, the risk is the buyer's. The seller has no further duty, but has only to receive the price; the buyer has received his full consideration under the contract. In effect, he has acquired title, and mortgaged back to the seller. This rule, however, is not adopted in all the decisions.
It is wise, when possible, to have the terms of the agreement or sale make clear where the risk is to lie.
Need of Uniform Sales Act. As has been shown, the laws of different States vary in their application to sales, and the desirability of the adoption of some Uniform Sales Act seems clear, but the adoption of the present act of that name is not yet sufficiently general to allow its use in this chapter as a statement of the law of sales at the present time. In view of this conflict of laws, it is important to note that the interpretation of the sale or contract will be made under the laws of the State where the contract was made, rather than the State where the action is brought, unless otherwise stipulated.
Terms Used. The term “commercial paper" has sometimes been used for a title as an alternative for“ negotiable instruments,” but the latter is the term more generally accepted by lawyers. Considered together, a better view-point of the subject is secured than by the use of either alone.
BILL OF EXCHANGE
Description. If a merchant A in London buys goods from, and owes money for them to, B in Paris; and if B in Paris, at the same time, owes money to C in London; it is very clumsy for A to send a bag of gold to B, who at once sends back most of it in a bag to C. It is much simpler for B to write to C, arranging for him to go to A and get the money which A owes B, or part of it.
Such a transaction in time became standardized into the “ bill of exchange," a request, or rather an order, from B to A to pay a sum named to C, charging this sum to the account of B.
Form of Bill. A bill of exchange may be in the following form: $275100
New York,... Jan. 2, 1917.---Sixty daya_.__after date pay to the order of
Alexander Winchester, Two Hundred Seventy Five so
Dollars value received and charge the same to the account of To William Amea,
--......Henry fenka... 540 Weyboaaet Street,
The person who executes the bill, Henry Jenks, is called the drawer; William Ames, the drawee; and Alexander Winchester, the payee.
Acceptance. The routine established is for Alexander Winchester to
Accepted Feb. 9,1917.
Any other words, with signature, are sufficient if they show the intent.
Negotiation. In the course of time the function of the bill of exchange was extended. Alexander Winchester owed money to Philip Clark who did not care to lug around coin; so Winchester turned the bill over to Clark, indorsing it to him; Clark perhaps indorsed to another, and the bill of exchange as a negotiable instrument was a great boon in business transactions.
Use of Bill of Exchange with Bill of Lading. A bill of exchange is now used mainly in connection with a sale of goods. Bills are often in duplicate, and sent by different mails. Sometimes the bill is sent attached to the bill of lading to some third party (perhaps a bank) who advances money on it, looking to the bill of lading in part for security. The carrier has no right to deliver goods without presentation of the bill of lading.
Sometimes the two bills are sent together to some one as agent for the drawer (perhaps again a bank) who is instructed to deliver the bill of lading when the bill of exchange is accepted, dependence being thus placed in part on the credit of the drawee, the consignee, and in part on his acknowledgment of his obligation to pay.
Checks. Later“ banks were established and merchants“ deposited " money in them and kept their accounts sufficiently large so that they were drawing on them constantly, and the bill of exchange took a simpler form in the well-known” check” which is now accorded a character of its own, somewhat distinct from the bill of exchange. Debts were paid by checks and these were first sent to the banks for collection, but now they go at once into the depositor's account as the equivalent of cash. The check often goes through various hands before reaching the bank on which it is drawn, each holder indorsing it to the next holder; it has become a negotiable instrument.
Indorsement. The nature of indorsement is this. If a bill of exchange, or note, or check, has come into the hands of some man who is transferring it to another, he signs his name across it, commonly on its back. By this act of signing, unless there are added words of qualification, he authorizes its transfer to another who is often specified; if he delivers it, he does transfer it. He also agrees by thus signing his name that he will pay it if the drawer or maker does not do so. His indorsement is a protection to later holders; any earlier indorser is a protection to him. His act of signing is an “indorsement” and he is an “indorser.”
A very common form of indorsement is :
Say to the order of Philip Clark
Description. A merchant, manufacturer, or publisher finds that at certain times of the year he must make extensive payments for material or labor, while his sales and the payments for them come at a later time. It is good business policy for him to borrow money from one who has it available, giving his “promissory note " for it, promising a future payment. Nowadays his borrowing is from a bank as a rule. The payment for materials or goods may, however, be directly made by a “note to the seller, and in such case the payee of the note may take it to a bank and in effect sell it to them, indorsing it; it may go through several hands as a negotiable instrument" with a series of indorsements. Form of Promissory Note. The form of note may be:
New York.--- Jan. 2, 1917.-.-....Thirty darya....after date I promise to pay to the order of
Benjamin Holliday One Hundred 10
- Dollars Payable at... First
...First National Bank of Boston. Value received.
or some similar form. Hiram Weeks who executes the note is called the maker and Benjamin Holliday the payee. The time of payment is some times“ on demand or on some specific date as on May 1, 1917.”