“Valuable security”
AI Assist
Summary
A valuable security is any document that creates, extends, transfers, restricts, extinguishes or releases a legal right, or in which a person admits a legal liability or that they do not have a certain legal right. It applies when a document has those effects or purports to have them. Such a document is treated as affecting legal rights and liabilities for legal purposes.
Example
Ravi writes his name on the back of a bill of exchange to endorse it. Because that endorsement transfers the right to the bill to whoever becomes its lawful holder, the endorsement is a valuable security.
Bare Act
Enacted textThe words “valuable security” denote a document which is, or purports to be, a document whereby any legal right is created, extended, transferred, restricted, extinguished or released, or who hereby any person acknowledges that he lies under legal liability, or has not a certain legal right.
Illustrations
(1) A writes his name on the back of a bill of exchange. As the effect of this endorsement is to transfer the right to the bill to any person who may become the lawful holder of it, the endorsement is a “valuable security”.
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