Sec. 14 Blanks, when may be filled.

Where the instrument is wanting in any material particular, the

person in possession thereof has a prima facie authority to complete it by filling up the blanks therein.
And a signature in order that the paper may be converted in to a negotiable instrument operates as a
prima facie authority to fill it up as such for any amount.

Steps in issuance of negotiable instrument

(1) the mechanical act of writing the instrument completely and in accordance with the requirements of
Sec.1

(2) the delivery of the complete instrument by the maker or drawer to the payee or holder with the
intention of giving effect to it.

Sec.14 applies only to an incomplete instrument which has been delivered by the maker to payee.
Sec.15 to an incomplete instrument undelivered.
Sec.16 to a complete instrument but undelivered.

Rules where instrument incomplete but delivered

1. Authority to fill up the blanks- the holder or person in possession has prima facie authority to
complete an incomplete instrument by filling up the blanks therein.

2. Authority to put any amount- a signature on a blank paper delivered in order that may be converted
into a negotiable instrument operates a prima facie authority to fill it up as such for any amount

3. Right against party prior to completion the instrument may be enforced only against a party prior to
completion if filled up strictly in accordance with the authority given and within a reasonable time.

4. Right of holder in due course- The defense that the instrument had not been filled up strictly in
accordance with the authority given and within a reasonable time is not available as against a holder in
due course.

Sec.15 Incomplete instrument not delivered Where an incomplete instrument has not been delivered
it will not, if completed and negotiated without authority be a valid contract in the hands of any
holder as against any person whose signature was placed thereon before delivery.

Rules where instrument incomplete and undelivered

1. Defense against a holder in due course- the fact that an incomplete instrument completed without
authority had not been delivered, is a defense even against a holder in due course Example: Suppose M
makes a note for P 1,000,000 with the name of the payee in blank and keeps it in his drawer. P steals the
note and inserts his name as payee and then indorses the note to A. A to B, B to C, and C to D o holder in
due course. (see Sec. 52) Can D enforce the note against M?

No because the law is specific instrument may be considered a forgery insofar as M is concerned
2. Defense available to parties prior to delivery- the invalidity of the above instrument is only with
reference to the parties whose signatures appears on the instrument before and not after the delivery.

Sec. 16 Delivery; when effectual; when presumed. Every contract on a negotiable instrument is
incomplete and revocable until delivery of instrument for the purpose of giving effect thereto. Rules
when instrument mechanically complete 1. Copy every contract a. Delivery- transfer of possession
actual or constructive from one person to another. b. Issue- first delivery of instrument complete in
form to a person who takes it as holder. c. Holder- payee or indorsee of a bill or note who is in
possession of it.

Example: M makes a note payable to the order of P and keeps it in his drawer. In absence of delivery,
the instrument through complete in all its particulars there is no contract. M does not assume any
liability. P does not acquire any right against M who may revoke with or without any reason.

2. In possession of party other than a holder in due course if a complete instrument is found in the
possession of an immediate party other than a holder in due course there is a prima facie presumption
of delivery but subject to rebuttal

3. Delivered conditionally or for a special purpose. If the delivery was made or authorized it may be
shown to have been conditional or a special purpose only and not for the purpose of transferring the
property to the instrument. When delivery is made it is presumed to be made with the intention to
transfer ownership of instrument to payee.

Example: M delivers the note to P on condition that it will not be binding on him until a co maker has
been procured or for collection only. P cannot enforce the instrument against M because the latter can
set up the defense that the delivery may be conditional or for a special purpose only.

4. In the hand of a holder in due course If a complete instrument is in hands of holder in due course a
valid delivery thereof by all parties prior to him is conclusively presumed.

Example: In two proceeding examples if the note were negotiated to D under circumstances which
make him a holder in due course or cannot prove that the note was stolen by P or was delivered
conditionally or for a special purpose only because once an instrument is in hands of D as to M a prior
party to D as to make him liable is conclusively presumed.