CONDITIONAL ACCEPTANCE.

Positioning that claimant to clearly demonstrate on the record of the distinction between Fraudulent and Non-Fraudulent Misrepresentation

Below is information that I received from a book titled, COLLEGE LAW fourth edition published in 1951. I am focusing on “Mistakes Which Renders a Contract Void”.   As many of us know, the older the books are the more accurate they are.

Thus far for the last 3 years this information has stopped the IRS in its tracks!

 

“Anything void in the beginning does not become valid by lapse of time.”

“Things invalid from the beginning cannot be made valid by subsequent act.”

“Bills of Exchange”. As defined in the Negotiable Instruments Law, a bill of exchange is “an unconditional order in writing addressed by one person to another, signed by the person giving it, requiring the person to whom it is addressed to pay on demand…”.

Bills of exchange consists of drafts, trade acceptance, and checks. Each of these is a negotiable contract, but still each class of bill of exchange differs in form and the circumstances under which it arises. All of them are design to facilitate trade and commerce. In addition to learning the difference in each of these classes, it is also well to visualize the ways in which they tend to facilitate trade.

What is a bill of exchange? A bill of exchange, commonly called a bill or a draft, is defined by the Uniform Negotiable Instruments Act as “an unconditional order in writing addressed by one person to another, signed by the person giving it, requiring the person to whom it is addressed to pay on demand, or at a fixed or determinable future time, a sum certain in money to order or to bearer.”

“Drawer”. The person who executes any bill of exchange, such as a draft, a trade acceptance, or a check, is called the drawer.

“Drawee”. The person who is ordered to pay a bill of exchange is called the drawee.

“Acceptor”. When the drawee accepts the bill of exchange, that is, indicates his willingness to assume responsibility for its payment, he is called the acceptor.

“Maker”. The person who executes a promissory note is called the maker.

“Payee”. The party to whom any negotiable contract is made payable is called the payee.

 

ESSENTIALS OF NEGOTIABILITY

Features that distinguish a negotiable contract from a nonnegotiable one. There are seven characteristics or essentials of negotiability. These essentials must be learned so that any written contract can be analyzed to see if it meets all seven. If it does, it is negotiable; if it lacks anyone, it is a nonnegotiable.

1. The instrument must be in writing and signed by the party executing it.
2. The instrument must contain either an order to pay or a promise to pay.
3. The order or the promise must be unconditional.
4. The instrument must provide for the payment of a sum certain in money.
5. The instrument must be payable either on demand already fixed or determinable future time.
6. The instrument must be payable to the order of a payee or to the bearer of the instrument.
7. The payee (unless the instrument is payable to the bearer) and the drawee must be designated with reasonable certainty.

 

DEFENSES

Real Defenses. Real defenses are defenses of somewhat unusual character that occurs not the merit of the transaction, but rather the nature of the instrument itself. They are sometimes called absolute defenses because they are good against even the holder in due course.

Mistakes Which Renders a Contract Void. These mistakes made in the execution of a negotiable contract constitute a good defense against even a holder in due course.

Fraud in the Inception. Fraud in the inception, which is one of the mistakes that render an agreement void, is a real defense and exists when a person is induced by fraud, without negligence on his part, to sign a negotiable instrument that he believes is an instrument of some other character. Since the party primarily liable has no intentions of creating a negotiable instrument, none is created.

 

From another book, “Contracts”, third edition, Brian a Blum. “THE LAW IS A FACT, SO THAT A MISTAKE IN LAW IS COVERED BY MISTAKE DOCTRINE”

After taking some pains to learn the difference between fact and law, you may be disappointed to find that this is one area in which the distinction does not apply. Although older cases did not regard an error in law as a mistake of fact, it is now accepted that the legal rules governing or pertinent to the transaction do qualify as facts. They constitute an existing state of affairs that can be objectively ascertained. For an example, a piece of beachfront land is sold to a buyer who intends to build a vacation home on it. The parties are unaware that the land is in an environmental protection zone and a state statue prohibits all building on it. Their ignorance of the law is a mistake of fact. (§15.2.1)