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The document discusses various issues relating to alterations made to negotiable instruments like checks. It states that in cases of alteration to the amount of a check, the collecting bank should suffer the loss rather than the drawee bank, unless the negligence of the drawee bank caused the loss. Alteration to the payee's name means the drawee bank cannot debit the drawer's account. Alteration of a check's serial number is not considered a material alteration. The document also distinguishes between "fraud in execution" (or fraud in factum), where a person does not know they are signing a negotiable instrument, and "fraud in inducement", where a person intends to sign a negotiable instrument but

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66 views1 page

61

The document discusses various issues relating to alterations made to negotiable instruments like checks. It states that in cases of alteration to the amount of a check, the collecting bank should suffer the loss rather than the drawee bank, unless the negligence of the drawee bank caused the loss. Alteration to the payee's name means the drawee bank cannot debit the drawer's account. Alteration of a check's serial number is not considered a material alteration. The document also distinguishes between "fraud in execution" (or fraud in factum), where a person does not know they are signing a negotiable instrument, and "fraud in inducement", where a person intends to sign a negotiable instrument but

Uploaded by

Huzzain Pangcoga
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as TXT, PDF, TXT or read online on Scribd
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As between the drawee and the collecting

bank (that is treated as a general indorser),


it is the collecting bank that should suffer
the loss in case of alteration of the amount
(1996 Bar).
Exception: If the negligence of
the drawee bank is the proximate cause of
the loss.
-Blor s 09 bsin 3)
c)
In case of alteration of the payee's name,
the drawee bank has no right to debit
the account of the drawer; the alteration
prevents recovery by the holder (1977 Bar).
Is the alteration of the serial number of a check
a material alteration?
1239677
mos son ai
noriste
PON
70 505 g 6
No. The alteration of the serial number of the
check does not alter the effect of the instrument,
nor does it modify in any respect the obligation
of a party thereto. It does not change the items
which are required to be stated under Section 1,
NIL (International Corporate Bank v. CA, September
5, 2006; 1999 Bar).
13.06. FRAUD
a)
398719328
99wsah grl
331816.on/
"Fraud in execution" (fraud in factum or fraud
in esse contractus)
present when a person is
induced to sign an instrument not knowing its
character as a note or a bill. The person who signs
the instrument does not know that he is signing
a negotiable instrument. Example: A blind person
was made to sign a piece of paper he believes
to be a credit application although it is really a
promissory note.
"Fraud in inducement' - the person who signs
the instrument intends to sign the same as a
negotiable instrument, but was induced to do
so only through fraud; his consent to issue a
negotiable instrument was vitiated by fraud.
C
Fraud in factum is a real defense, while fraud in
inducement is a personal defense (2011 Bar).

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