When is delivery made conditional or for a special purpose? Provide examples.


It depends upon whom the instrument is delivered. If the instrument lands in the hands of a holder in due course (one who does not know of the conditional delivery or of its special purpose), the instrument will be as if there is no condition.


To a holder not in due course, prior parties are not bound by the instrument.


Note: The law contemplates that the condition is orally or verbally conveyed to the holder upon delivery, because of the rule that the negotiability is determined only upon the face of the instrument.