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Unfavorable court ruling in relation to credit institutions’ use of negotiable instruments

January 2011 - Finance. Legal Developments by Delphi.

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In a recent case by the Swedish Supreme Court (Sw. Högsta domstolen) (T 4904-08), the burden of proof of payments made by the debtor in relation to a negotiable promissory note was placed on the creditor. Since the borrowers had not confirmed that the debt had not been paid, the transferees were not in good faith in relation to the payment of the debt.

The effect is that the difference between negotiable promissory notes and ordinary claims has been blurred. Another consequence is that banks and other credit institutions are reconsidering their use of negotiable promissory notes.

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