What are the two important Kinds of Delivery?

Delivery may be (1) actual, (2) constructive, (3) conditional, or for special purpose.

1. Actual delivery:

Actual delivery means physical transfer.

2. Constructive delivery: Constructive delivery means delivery in effect. It may happen when instrument is held by one party as an agent for both the parties.

Example:

Both A and B have their accounts in X Bank. A, the holder of a negotiable instrument payable to bearer, directs the banker to transfer the instrument to B’s credit in B’s account, with the bank. The banker does so, and accordingly now possesses the instrument as B’s agent. In this case, there is constructive delivery.

3. Conditional delivery or delivery for a special purpose:

It is common to deliver instrument conditionally or for a special purpose. If condition is not fulfilled, the transferee will not acquire any title. However, if it is negotiated to a holder in due course, he will acquire a good title.

Example:

A, the holder of a bearer negotiable instrument, gave it to a bank for collection. The bank negotiated it by delivery to B. B will not acquire any title. However, if B transfers the instrument to C, a holder in due course, C will acquire a good title.

Indorsement (Endorsement)

Indorsement is the means of negotiation, i.e., negotiation is effected by indorsement.

When the maker or holder of a negotiable instrument signs the same, otherwise than such maker, for the purpose of negotiation on the back or face thereof or on a slip of paper annexed thereto, he is said to indorse the same (Sec. 15).

This slip of paper is called ‘allonge’. The person who indorses is called the ‘indorser’. The person to whom the instrument is indorsed is called the ‘indorsee’.