BOUGHT NOTE

3 definitions found across Law Mind sources

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BOUGHT NOTEAuthored
The Law Mind • 845 words
Definition
A bought note is a written memorandum delivered by a broker to the buyer (vendee) confirming the terms of a completed sale. It records the essential details of the transaction — what was purchased, at what price, and on what terms — and serves as evidence of the contract of sale as brokered. The bought note is the buyer's counterpart to the sold note, which the same broker delivers simultaneously to the seller (vendor). Together, the bought note and sold note constitute the broker's record of the transaction and, when read together, form the contract between the parties. ---
Common Confusion
BOUGHT NOTE vs. SOLD NOTE: These two documents are generated together from the same brokerage transaction and are easily conflated. The distinction is directional: the bought note goes to the buyer; the sold note goes to the seller. Both are prepared by the broker at the same time and should reflect identical material terms. When they differ — due to error or broker overreach — questions arise as to which, if either, binds the parties. Researchers encountering disputes in historical commercial cases should examine both documents as a pair, not in isolation. BOUGHT NOTE vs. BILL OF SALE: A bought note is a broker's memorandum of a sale, not an instrument of conveyance. A bill of sale transfers title. The bought note merely evidences that a sale was agreed upon through a broker's agency. ---
Why It Matters in Research
The bought note is primarily a creature of commercial and agency law, most commonly appearing in historical English mercantile practice and in cases involving brokers operating in commodity, securities, and shipping markets. Researchers should be aware of several navigational points: First, the bought note's legal significance turns on the law of agency. If the broker acted within authority, both buyer and seller are bound by the notes delivered to them, even if the parties never directly communicated. This makes broker authority a threshold issue in any dispute involving a bought note. Second, the bought note doctrine appears frequently in nineteenth-century English commercial cases that were adopted or adapted in American courts. American researchers will encounter it most often in older equity and commercial law decisions, particularly those touching commodity brokers and stock jobbers. Its prominence has declined with the formalization of exchange trading, standardized confirmation systems, and electronic recordkeeping. Third, discrepancies between the bought note and sold note were a recurring source of litigation. Courts examined whether a discrepancy voided the contract, bound only one party, or reflected a broker's unauthorized deviation. This line of cases is important for understanding how courts treated broker-made contracts and the parol evidence rule in commercial settings. Fourth, in admiralty and shipping contexts, bought and sold notes sometimes appeared in transactions involving ship sales or cargo — researchers working in those areas should note the overlap with admiralty lien doctrine that Bouvier's places nearby in the relevant entries. ---
Historical Dictionary Support
Bouvier's Law Dictionary defines the bought note concisely as "a written memorandum of a sale, delivered, by the broker who effects the sale, to the vendee," citing Story on Agency and several English reporter volumes. Bouvier's correctly situates the instrument within the law of brokerage and agency, noting that when the broker has not exceeded his authority, both parties are bound by the respective notes. The citations — drawn from English nisi prius and exchequer reporters — reflect the doctrine's English mercantile origins. What Bouvier's does not address is the evidentiary function of the bought note in later American practice or the complications that arose when exchange rules, rather than common-law agency principles, governed broker conduct. Researchers relying solely on Bouvier's will have a sound doctrinal baseline but should supplement it with treatises on commercial brokers and exchange practice for any post-Civil War American context. ---
Jurisdictional Note
The bought note is largely a historical English commercial law concept. American courts absorbed the doctrine through nineteenth-century agency and contract law but did not develop it as a distinct statutory category. Modern securities and commodities regulation has displaced the common-law bought note framework in most transactional contexts. Researchers in English law will find richer primary source material than those working in American jurisdictions. ---
Encyclopedia Cross-Reference
Contracts & Commercial Law Encyclopedia — Negotiable Instruments: Types (Notes, Drafts, Checks, Certificates of Deposit) Business Organizations & Corporate Law Encyclopedia — Corporate Finance: Debt Securities (Bonds, Debentures, Notes) ---
Related Terms
Sold Note — the broker's counterpart memorandumdelivered to the vendor Bill of Sale — instrument of conveyance; distinct from the bought note Broker — the agent who generates both the bought note and sold note Agency — governing legal framework for broker authority and party binding Contract of Sale — the underlying agreement evidenced by the bought and sold notes Confirmation — modern functional equivalent in securities and commodities trading Parol Evidence Rule — relevant when bought note terms are disputed or incomplete
BOUGHT NOTEmain
Bouvier's Law Dictionary • 1928
other admiralty liens, may be lost by un- reasonable delay in asserting it, if the rights of purchasers or incumbrancers have inter- vened; 9 Wheat. 409; 16 Bost. L. Rep. 264; 17 id. 93, and authorities there cited; 2 W. & M. 48; 1 Swab. 269; 1 Cliff. 308; 5 Rob. Adm. 94. The lien extends to the fund re- coverable for the ship's tortious destruc- tion; 59 Fed. Rep. 621. The rules under which courts of admiralty marshal assets claimed to be applicable to the payment of bottomry and other maritime liens and of common-law and statutory liens, will be more properly and fully considered in the article Maritime Liens, which see. But it is proper here to state that, as between the holders of two bottomry bonds upon the same vessel in respect to different voyages, the later one, as a general rule, is entitled to priority of payment out of the proceeds of the vessel; 1 Dod. 2013; Olc. 55; 17 Bost. L. Rep. 93; 1 Paine 671. Seamen have a lien, prior to that of the holder of the bottomry bond, for their wages for the voyage upon which the bot- tomry is founded, or any subsequent voy- age; but the owners are also personally liable for such wages, and if the bottomry- bond holder is compelled to discharge the seamen's lien, he has a resulting right to compensation over against the owners, and has been held to have a lien upon the pro- ceeds of the ship for his reimbursement; 8 Pet. 538; 1 Abb. Adm. 150; 1 Hagg. Adm. 62. And see 1 Swab. 261; 1 Dod. 40; 4 Cranch 328. Under the laws of the United States, bot- tomry bonds are only quasi negotiable, and except in cases subject to the principle of equitable estoppel, the indorsee takes only the payee's right; 37 Fed. Rep. 436. The act of congress of July 29, 1850, de- claring bills of sale, mortgages, hypotheca- tions, and conveyances of vessels invalid against persons other than the grantor or mortgagor, his heirs and devisees, not hav- ing actual notice thereof, unless recorded in the office of the collector of the customs where such vessel is registered or enrolled, expressly provided that the lien by bot- tomry on any vessel, created during her voyage by a loan of money or materials necessary to repair or enable such vessel to prosecute a voyage, shall not lose its prior- ity or be in any way affected by the pro- visions of that act. See Pars. Mar. Law; Abbott, Shipping, with Story and Perkins's notes; Hall's translation of Emerigon's Essay on Maritime Loans, with the Appen- dix; Tyler, Usury (pt. iii. Mar. Loans); Marsh. Ins. book 2; 3 Kent 49; 8 Pet. 538; 1 Hagg. Adm. 179; 2 Pet. Adm. 295; 54 Fed. Rep. 188. See NAUTICA PECUNIA.
BOUGHT NOTEmain
Bouvier's Law Dictionary • 1928
A written memo- randum of a sale, delivered, by the broker who effects the sale, to the vendee; Story, Ag. § 28; 11 Ad. & E. 589; 8 M. & W. 834. Bought and sold notes are made out usu- ally at the same time, the former being de- livered to the vendee, the latter to the ven- dor. When the broker has not exceeded his authority, both parties are bound thereby; 4 Esp. 114; 2 Campb. 337; 1 C. & P. 388; 5 B. & C. 436; 6 id. 117; 1 Bell, Com. 4th ed. 347, 477. Where the same broker acts for both parties, the notes must correspond; 1 Holt, N. P. 172; 5 B. & C. 436; 4 Q. B. 737; 17 id. 103; 3 Wend. 459; 2 Sandf. 133. The broker, as to this part of the trans- action, is agent for both parties; 2 H. & N. 210; 16 Gray 442; 71 Pa. 69. Whether a memorandum in the broker's books will cure a disagreement, see 9 M. & W. 802; 1 M. & R. 368; 17 Q. B. 115; 1 H. & Ν. 484; but it is said to be the better opinion that the signed entry in the broker's book constitutes the real contract between the parties; Whart, Ag. § 720; Mech. Ag. 932; 1 C. P. D. 777; 20 L. J. Q. B. 529;9 M. & W. 802; but it may be shown that the entry was in excess of the broker's author- ity; 4 L. R. Ir. 94; that the bought and sold notes do not constitute the contract, see 17 Q. B. 115. Where there is a vari- ance between the bought and sold notes, and no entry of the transaction, there is no contract; Whart Ag. § 721; 17 Q. B. 115. A bought note will take the case out of

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