Bearer Paper Definition and Legal Meaning
On this page, you'll find the legal definition and meaning of Bearer Paper, written in plain English, along with examples of how it is used.
What is Bearer Paper?
(n) Bearer Paper is the financial instrument which can be freely transferred by delivery and handing over of the document with or without the consent of the drawer of such document. The new owner or holder of the document can claim the amount payable on such document
History and Meaning of Bottomry
Bottomry is a term used in maritime law, which refers to a contract made between the shipowner and a lender. The contact allows the shipowner to pledge the ship, freight, or cargo as security for a loan that they may need. The word "bottomry" is derived from the Latin phrase "boum trahere," which means "to bind a bullock." Over time, "boum trahere" changed into "bottomry," referring to the agreement where the hull of the ship is pledged as security.
Bottomry's history can be traced back to ancient times when seafarers needed to borrow money for maritime expeditions. It was especially common during the medieval period when seafaring ventures were on the rise, and voyages were longer and further than ever before. Bottomry became an essential part of maritime law, and many shipowners relied on it to finance their voyages, pay for repairs or acquire new equipment.
Examples of Bottomry
- John, a shipowner, pledges his ship and its cargo as security for a bottomry bond of $50,000 to repair the vessel's damaged equipment.
- After encountering stormy weather, the ship's engine machinery breaks down. Juan, the shipowner, takes out a bottomry bond of $100,000 to buy new machinery, pledging the ship as security.
- Maria, the owner of a freight vessel, borrows $30,000 through a bottomry bond to finance the purchase of new cargo.
Legal Terms Similar to Bottomry
- Respondentia: A type of loan in which cargo is used as collateral.
- Salvage: Compensation paid for the rescue of a ship or its cargo from a hazardous situation.
- General Average: Refers to the expenses shared by the shipowner or cargo owners in a common maritime adventure, such as rescuing or saving the ship or cargo from an imminent threat.