(a) If an instruction has been originated by an appropriate person but is incomplete in any other respect, any person may complete it as authorized and the issuer may rely on it as completed, even though it has been completed incorrectly.

(b) Unless otherwise agreed, a person initiating an instruction assumes only the obligations imposed by Section 55-8-108 NMSA 1978 and not an obligation that the security will be honored by the issuer.

History: 1978 Comp., § 55-8-305, enacted by Laws 1996, ch. 47, § 35.

OFFICIAL COMMENTS

UCC Official Comments by ALI & the NCCUSL. Reproduced with permission of the PEB for the UCC. All rights reserved.

1. The term instruction is defined in Section 8-102(a)(12) [55-8-102 NMSA 1978] as a notification communicated to the issuer of an uncertificated security directing that transfer be registered. Section 8-107 [55-8-107 NMSA 1978] specifies who may initiate an effective instruction.

Functionally, presentation of an instruction is quite similar to the presentation of an indorsed certificate for reregistration. Note that instruction is defined in terms of "communicate," see Section 8-102(a)(6) [55-8-102 NMSA 1978]. Thus, the instruction may be in the form of a writing signed by the registered owner or in any other form agreed upon by the issuer and the registered owner. Allowing nonwritten forms of instructions will permit the development and employment of means of transmitting instructions electronically.

When a person who originates an instruction leaves a blank and the blank later is completed, subsection (a) gives the issuer the same rights it would have had against the originating person had that person completed the blank. This is true regardless of whether the person completing the instruction had authority to complete it. Compare Section 8-206 [55-8-206 NMSA 1978] and its Comment, dealing with blanks left upon issue.

2. Subsection (b) makes clear that the originator of an instruction, like the indorser of a security certificate, does not warrant that the issuer will honor the underlying obligation, but does make warranties as a transferor under Section 8-108 [55-8-108 NMSA 1978].

"Appropriate person" Section 8-107 [55-8-107 NMSA 1978]

"Instruction" Section 8-102(a)(12) [55-8-102 NMSA 1978]

"Issuer" Section 8-201 [55-8-201 NMSA 1978]

Repeals and reenactments. — Laws 1996, ch. 47, § 35, repealed former 55-8-305 NMSA 1978, as amended by Laws 1987, ch. 248, § 22, relating to staleness as notice of adverse claims, and enacted a new section, effective May 15, 1996. For provisions of former section, see the 1995 NMSA 1978 on NMOneSource.com.