BOUGHT AND SOLD NOTES

Definition

Bought and sold notes are the paired written memoranda issued by a broker upon completing a transaction on behalf of principals. When a broker is engaged to buy and sell goods, the broker delivers to the buyer a document recording the purchase — the bought note — and to the seller a corresponding document recording the sale — the sold note. Both notes are issued in the broker's own name, acting as agent for each respective party. Together, they constitute the broker's confirmation of the transaction and, where the broker has acted within authority, bind the principals to its terms. The two documents must substantially correspond with one another. Each should identify both contracting parties, the quantity of the goods, and the agreed price. The bought note and sold note together form a single completed contract, and any material discrepancy between them may affect whether a binding agreement was formed.

Core Elements

Each note should contain: - The names of both the buyer and the seller - A description and quantity of the goods bought and sold - The price, where agreed upon - Correspondence between the two notes — they must substantially match The broker issues the notes in the broker's own name as agent, not in the names of the principals directly. Binding effect on the principals depends on the broker having acted within the scope of authority.

Why It Matters in Research

This term is a product of a specific period in commercial and mercantile law when commodity brokers routinely acted as intermediaries between buyers and sellers who might not deal directly with one another. Researchers working in nineteenth-century commercial disputes — particularly in shipping, grain, textile, and financial commodity markets — will encounter bought and sold notes as the operative documents establishing contractual obligation. The critical research trap is the asymmetry of perspective embedded in the terminology: the bought note goes to the buyer, recording what the buyer acquired; the sold note goes to the seller, recording what the seller disposed of. The naming logic follows the recipient's position, not the transaction direction. This can generate confusion when reading older case law or pleadings that reference only one of the two notes without explaining which party held it. Discrepancies between the bought note and sold note were a recurring source of litigation. Where the two notes differed — in quantity, price, delivery terms, or party identification — courts were called upon to determine whether a contract had been formed at all, and if so, on whose terms. Researchers tracing the law of contract formation through mercantile practice should treat disputes over these documents as a significant line of authority. The term largely disappears from modern legal usage as standardized exchange contracts, electronic confirmation systems, and regulated brokerage documentation replaced the informal broker's note system. Researchers encountering the term in modern sources should treat it as either a historical reference or a specialized surviving usage in particular commodity or securities contexts. Connection to broker's authority is essential: the notes bind the principals only where the broker acted within authority. Cases involving bought and sold notes frequently turn on agency law questions — apparent authority, ratification, and the consequences of exceeding instructions — making this term a useful entry point into nineteenth-century agency doctrine as applied in commercial settings.

Historical Dictionary Support

The four source dictionaries are in close agreement on the basic structure: Burrill, Black's (both editions), and Rapalje & Lawrence all define bought and sold notes as the broker's paired memoranda, issued in the broker's own name as agent. All trace the binding effect to Story's treatment of agency, specifically the proposition that principals are bound where the broker has not exceeded authority. Rapalje & Lawrence adds the most procedurally useful detail, specifying the required contents of each note — names of both parties, quantity, and price — and emphasizing that the two notes must substantially correspond. This correspondence requirement is implied in the other sources but made explicit by Rapalje & Lawrence, and it proved consequential in litigation over whether matching notes constituted a completed contract. Black's second edition entry appears corrupted in the surviving source (the text breaks off mid-sentence), but its substance through the legible portion is consistent with the first edition and with Burrill. Researchers consulting original print editions should not rely on the digitized second edition text for this entry without verification. None of the historical dictionaries address what happens when the notes are delivered but the principals subsequently dispute the broker's authority — a question that the case law itself must answer. The dictionaries function here as structural descriptions rather than analytical guides to contested doctrine.

Jurisdictional Note

Bought and sold notes were primarily a feature of English mercantile practice, and the foundational legal treatment derives from English commercial law. American courts adopted the framework largely intact, particularly in commodity trading contexts. Researchers should not assume identical formal requirements across jurisdictions; some American courts treated the correspondence requirement more or less strictly than others.

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