Section 918.- A bill of exchange payable to bearer is transferred by mere delivery.

 

Section 919.- An indorsement must be written on the bill of exchange, or on an allonge. It must be signed by the indorser.

An indorsement is valid even though the beneficiary is not secified, or the indorser has done nothing more than put his signature on the back of the bill or allonge in which case it is called “indorsement in blank”.

 

Section 920.- An indorsement transfers all the rights arising out of a bill of exchange.

If the is in blank, the holder may :

(1)   Fill up the blank, either with his own name or with the name of some other person ;

(2)   Indorse the bill again in blank, or to some other person ;

(3)   Transfer the bill to a third person without filling up the blank, and without indorsing it.

 

Section 921.- The indorsement of a bill of exchange payable to bearer operates only as a guarantee (aval) for the drawer.

 

Section 922.- An indorsement must be unconditional. Any condition to which it is made subject is deemed to be unwritten.

A partial indorsement is void.

 

Section 923.- If an indorser specifies that he forbids further indorsement, he incurs no liability to the person to whom the bill of exchange is subsequently indorsed.

 

Section 924.- If a bill of exchange is indorsed after the expiration of the time for protest for non-acceptance or non-payment, then the indorsee acquires the rights of any existing acceptance against the drawee, and the rights of recourse against those who have indorsed the bill after the expiration of such time.

If, however, the bill is already protected for non-acceptance or non-payment before the indorsement, the indorsee has only the rights of his indorser against the acceptor, the drawer, and those who have indorsed the bill up to the time of protest.

 

Section 925.- When an indorsement contains the stipulation “value in collection”, “for collection”, “by procuration” or any other phrase implying agency, the holder may exercise all rights flowing from the bill of exchange, but he can only indorse it in the capacity of an agent.

In this case, the parties liable can only set upp against the holder defences which could be set up against the indorser.

 

Section 926.- When an indorsement contains the stipulation “value in security”, “value in pledge” or any other stipulation implying a pledge, the holder may exercise all the rights flowing from the bill of exchange, but an indorsement by him only avails as an agency indorsement.

The parties liable cannot set up against the holder defences founded on their personal relations with the indorser, unless the indorsement has taken place in pursuance of a fraudulent understanding.