Legal Definitions - take up

Take Up

In legal and financial contexts, "take up" primarily refers to two related actions concerning a financial instrument like a promissory note, check, or bill of exchange:

• Fulfilling an Obligation: To pay or discharge the debt or liability associated with the instrument, thereby completing the transaction or removing one's responsibility.
• Purchasing an Instrument: To acquire ownership of the instrument by buying it from another party.

Here are some examples illustrating how "take up" is used:

• Example 1: Fulfilling a Promissory Note

  A small business owner borrowed funds from a private investor to expand their operations, signing a promissory note agreeing to repay the loan by a specific date. On the due date, the business owner transfers the full amount, including interest, to the investor.

  This illustrates "taking up" the note because the business owner has paid and discharged their obligation under the promissory note, thereby fulfilling the terms of the agreement.

• Example 2: Discharging Liability on a Dishonored Check

  Sarah endorsed a check from a client to her contractor, essentially guaranteeing the payment. When the contractor tried to deposit the check, it bounced due to insufficient funds in the client's account. The bank then demanded payment from Sarah, as the endorser.

  If Sarah pays the bank the amount of the bounced check, she has "taken up" the instrument. She has discharged her liability as an endorser, stepping in to make good on the payment that the original payer failed to provide.

• Example 3: Purchasing a Mortgage Note

  A regional bank originated a mortgage loan for a homeowner. Later, a larger national financial institution decided to expand its portfolio of mortgage-backed securities. It offered to buy a package of existing mortgage loans, including the homeowner's note, from the regional bank.

  In this scenario, the national financial institution "takes up" the mortgage note by purchasing it from the regional bank. It now becomes the new holder of the note and the party to whom the homeowner owes payments.