The Research On The Risk Of Loss Of The Negotiable Instrument Forgery

It's always the difficulty for the Negotiable Instrument Law of each country to come to terms on the legal effect and the risk of loss of the negotiable instrument forgery. While the forger gains the unjust enrichment, someone sustains loss without fail. It's the forger who should bear the loss in this relationship. However, in the practice, the forger tends to disappear with his or her ill-gotten gains or become insolvent before the fact is uncovered. It's inevitable in such a situation that some innocent party is going to be left to suffer the loss and has nowhere to turn for relief. It's the issue this thesis tries to explore, that is which innocent party should bear the risk of loss and how to balance the rights and liabilities among the concerned parties. Comparing with the related stipulations in the common law system and civil law system, this thesis discusses the mode of loss-bearing under the circumstance of issuance forgery and endorsement forgery respectively on the basis of distinguishing three different methods of forgery, namely counterfeiting, embezzlement and misuse of the signature. This thesis addresses the issue from the following four parts:The opening part is the summary of the negotiable instrument forgery, which introduces the conception, the essential elements and the forms of forgery. To distinguish three different methods of forgery is an important step to explore the loss-bearing issue in the following parts.The second part discusses the problem of loss-bearing under the circumstance of signature counterfeiting on the negotiable instrument. It expounds the issue by distinguishing the issuance forgery and endorsement forgery, both under the circumstance of honoring and dishonoring the negotiable instrument. In the case of issuance forgery, the thesis discusses the rule of the payer assuming the loss and its exceptions as well as the rule of the immediate transferee assuming the loss, and introduces the Kildor-Hicks theory. In the case of endorsement forgery, the thesis discusses the rule of the forged assuming the loss in the civil law system and the rule of the immediate transferee assuming the loss in the common law system as well as the related stipulations in our Negotiable Instrument Law and their exceptions respectively. It also introduces the historical evolvement of loss-bearing issue of endorsement forgery in both legal systems and probes into the theory of right appearance and the system of acquisition with good faith.Part three focuses on the issue of loss bearing under the circumstance of embezzlement and misuse of seal on the negotiable instrument. Whether the forged party should bear the loss of forgery under this circumstance is up to the proof quoted by himself and whether he should bear the liability by estoppel.Part four puts up with the ideal mode of loss bearing caused by the negotiable instrument forgery, and gives some superficial suggestions to improve the legislation of our Negotiable Instrument Law. Take the issuance forgery for an example, the stipulations of our Law are a little bit stark, and the liability assumed by the buyer is too strict, which makes the distribution of rights and obligations unbalanced. Therefore, the thesis proposes that our Law should draw some valuable points from both legal systems. It should provide general principles as well as make some exceptions based on the consideration of balance of interests so as to fairly allocate the rights and obligations among concerned parties. Besides, the thesis also advises to set the mode of loss bearing by distinguishing three different methods of forgery, to establish the liability of comparative negligence, to protect the holder with good-faith demonstrably, and to protect the good-faith payer definitely.