Full text of District Notices (Federal Reserve Bank of Dallas) : Suggested Change in Standard Form of Trade Acceptance

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FE D E R A L R E SE R V E B AN K
OF DALLAS

July 23, 1927

SU G G E ST E D C H AN G E IN STANDARD FORM O F TRAD E A C C E P T A N C E

To all Member Banks in the Eleventh Federal Reserve District:
The following extract from the July, 1927, Federal Reserve Bulletin recommending a
change in the standard form of trade acceptance now in use is sent to all member banks
in this district for their information:
The Supreme Court of the State of Texas has recently rendered an opinion in the
case of Lane Company v. Crum, in which it is held that a trade acceptance is render­
ed non-negotiable by a statement contained therein as follows:
“ The obligation of the acceptor hereof arises out of the purchase of goods from the
drawer, maturity being in conformity with the original terms of purchase.”

A similar decision has also been rendered by the Supreme Court of Florida with
regard to trade acceptances bearing an indorsement of this kind.
These decisions raise serious doubt as to the negotiability of acceptances con­
taining statements of this kind in all jurisdictions where the courts of last resort have
not yet held such acceptances to be negotiable. The Federal Reserve Board considers
that it is advisable to change the standard form of trade acceptances now in use by
eliminating therefrom the clause giving rise to this doubt and by inserting in lieu
thereof a provision to read as follows:
The transaction which gives rise to this instrument is the purchase of goods by the ac­
ceptor from the drawer.

Yours very truly,

Governor.

This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (FedHistory@dal.frb.org)