LAW OF OBLIGATION ACT, PART 9, CHAPTER 47, DIVISION 2

Division 2

Transfer of Bill of Exchange 

  • 940. Transferability of bill of exchange

(1) A bill of exchange may be transferred to another person, including another party to the bill, by means of an endorsement unless the drawer has expressly precluded transferability by writing a stipulation ” üleandmispealdise tegemise õiguseta ” or ” indosseerimisõiguseta ” [without the right of endorsement] or any other equivalent stipulation on the bill.

(2) If the drawer of a bill of exchange writes a stipulation specified in subsection (1) of this section on the bill, the bill may be transferred as a registered security.

  • 941. Endorsement

(1) An endorsement shall be written on a bill of exchange or on a slip affixed thereto (allonge) and shall be signed by the endorser.

(2) An endorsement shall be unconditional. Any condition contained in an endorsement is deemed not to be written on the bill of exchange.

(3) An endorsement for partial transfer of the rights and obligations expressed in a bill of exchange is void.

  • 942. Endorsement in blank

(1) An endorsement may leave the beneficiary unspecified (an endorsement in blank). An endorsement in blank is valid even if it contains only the signature of the endorser written on the back of the bill of exchange or on the allonge.

(2) In the case of an endorsement in blank, the holder of the bill of exchange may:

1) fill in the blank either with the name of the holder or the name of another person;

2) re-endorse the bill in blank, or to another person;

3) transfer the bill to a third party without filling up the blank, and without endorsing the bill.

  • 943. Certification of rights of holder of bill of exchange

(1) The possessor of a bill of exchange is deemed to be the lawful holder of the bill if the possessor certifies the right thereof through a series of endorsements successive in time and in person (an uninterrupted series of endorsements), even if the last endorsement is in blank. Cancelled endorsements are deemed not to be written on the bill.

(2) If an endorsement in blank is followed by another endorsement, the person who signed this last endorsement is deemed to have acquired the bill by the endorsement in blank.

(3) If a bill of exchange is stolen from the former holder or lost or if the holder of the bill is dispossessed of the bill in any other manner against the will of the holder, the possessor of the bill is not deemed to be the lawful holder of the bill if the possessor was or should have been aware of such circumstances upon acquisition of the bill, and the possessor is required to give up the bill to the former holder regardless of the uninterrupted series of endorsements.

  • 944. Liability of endorser

(1) An endorser shall be liable for acceptance and payment of the bill of exchange unless the endorser has made an express stipulation on the bill indicating that the endorser is not liable.

(2) An endorser may prohibit any further endorsement by making a corresponding stipulation on the bill. In such case, the endorser shall not be liable to the persons to whom the bill is subsequently endorsed.

  • 945. Endorsement by procuration

(1) If an endorsement contains a statement ” volitused ” [by procuration] or ” inkassoks ” [for collection] or any other similar statement implying the mandate of the acquirer of the bill of exchange (an endorsement by procuration), the acquirer of the bill may exercise all rights arising from the bill of exchange on behalf of the endorser. In such case, the acquirer of the bill of exchange may endorse the bill only by means of a new endorsement by procuration.

(2) In the case specified in subsection (1) of this section, the party to the bill of exchange may only set up such defences against the person who acquired the bill on the basis of an endorsement by procuration which the party may set up against the endorser.

  • 946. Pledge endorsement

If an endorsement contains a written declaration implying a pledge (a pledge endorsement), the holder of the bill of exchange may exercise all rights arising from the bill as the pledgee. An endorsement by the pledgee only has the legal consequences of an endorsement by procuration.

  • 947. Endorsement after maturity

(1) An endorsement after protest for non-payment or after expiry of the term for protest is deemed to operate as an assignment of a right of claim specified in § 970 of this Act to the person to whom the bill of exchange is endorsed.

(2) An endorsement without a date is presumed to have been placed on the bill of exchange before expiry of the term for protest.

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