III.   Rights

A Bond, or Obligation is a written form of Deed with at least one penalty clause and one defeasance condition clause whereby the Obligor (person bound) binds himself or his heirs, or executors and administrators to pay a certain sum of money (penal sum), or perform some covenant for an Obligee.

In respect to the origin of Bonds in Law:

(i) While the concept of a solemn written Obligation with penalty and defeasance clauses is as ancient as the first agreements, the concept of Bond in Law originates as a form of surety and security against the Bills of merchants and traders for the payment of duties and excises to the Crown of England, beginning with the Act in 1694 (5 & 6 W&M c.20) entitled “An Act for granting to their Majesties several rates and duties upon tonnage of ships and vessels, and upon beer, ale and other liquors, for securing certain recompenses …”. The Act not only formally recognized for the first time the creation of the Bank of England, but the invention of the Bond as “insurance” that merchants and traders will honor their obligations to pay the Crown the duties and excises owed against goods held in custody through customs. Thereafter, Customs warehouses required some form of Bond as security for the holding of goods; and

(ii) From 1705 (4 & 5 Ann. c.16) the Act entitled “An Act for the amendment of the law, and the better advancement of justice”, the concept of providing surety and security against “goods” held in custody by the Crown was extended into the courts whereby actions of debt against a bill could be enforced more strictly when a bond was also attached and that once the bond and its penalties paid, the defendant would be discharged. The Act also introduced for the first time the concept that Bail bonds were to be taken as security against any Bail granted. Thereafter, the courts in England and its colonies have used Bonds as security against matters of debt and bail; and

(iii) From 1707 (6 Ann. c.37) and the Act entitled “An Act for the encouragement of the trade to America”, the notion of Bonds was extended for the first time to the acts of privateering and seizure of goods and property as “prizes of war”. American privateers (licensed pirates) as “claimants” were required to submit Bonds against all prizes as security and surety for the payment of the Crown against a portion of the estimated value of the booty. The failure to provide a Bond rendered such custody unlawful. Thereafter, the operation of privateering and admiralty law has required the lawful Bonding of all prizes to a speciality department of Admiralty specifically for the warehousing of "prizes of war" called the "Treasury"; and

(iv) In the same year of 1707 (6 Ann. c.17) and the formalization of the creation of the East India Company, the concept of fully private Bonds issued against goods or stock held in custody by a private corporation that could then be sold as Commercial Paper and Negotiable Securities was first introduced. This is the birth of Bonds as full commercial securities. The privilege was extended to the Bank of England by 1709 (8 Ann. c.7) and then by 1710 (9 Ann. c.21) a new private corporation called the South Seas Company was established with sophisticated rights for the issue and sale of Bonds as Negotiable Securities. By 1719 and (6 Geo. I. c.18), the power to issue Bonds as Commercial Paper by corporations was extended to two distinct companies (Royal Exchange Assurance and London Assurance Company) listed for assurance of ships and bottomry (original form of insurance). Lloyds successfully rose to dominate from the 19th Century literally on the ashes of its rivals by 1834 and the burning down of their offices; and

(v) The introduction of Government Bonds, originally in the form of Perpetual Bonds, also known as “Consols” and Gilt-Edged Securities, was from 1752 through the consolidation of national debts through the Bank of England. Their introduction represented the effective “flip” of Bonds connected with Annuities from being the lesser insurance and security to being the primary commercial asset and the Annuity becoming the underlying asset. Perpetual Government Bonds were phased out during the 20th Century for fixed term Government Bonds; and

(vi) The introduction of Municipal Bonds appears in the United States by 1812 and the City of New York. By the mid 1840’s Municipal Bonds were a dominant Negotiable Security in operation across the United States of America and only declined for a period upon the Civil War of the 1860’s.

The word bond originates from 1st millennium BCE Gaelic Bonde meaning “(male) head of household, free-born farmer” with bon meaning “base, sole of foot, foundation, source” and de meaning “as (the), on”. In the 13th Century CE and the introduction of Roman feudalism, the word was deliberately Latinized to bondagitum (bondage) meaning “to drive, to move, chase, agitate, excite to action, persecute, keep household animals or farm animals”. Hence the true and original meaning of bondage as “condition of (a man or woman) considered a household or farm animal; a serf, less than a Roman servant”.

The key elements shared by all forms of valid Bonds are:

(i) All valid Bonds are in writing; and

(ii) A Bond depends first upon the prior existence of some good, or bill or contract or thing whereby the one who makes or issues a valid Bond has an interest, or custody or control and such status is recorded in a Register; and

(iii) The prior good, or bill or contract or thing in question is then the subject within the clauses of the Bond of at least one condition clause and one consideration clause, but may also be associated with one or more penalty clauses; and

(iv) A valid Bond must have at least one condition clause being agreed “obligation” of performance of the one who makes or issues a valid Bond; and

(v) A valid Bond must have at least one consideration clause being the agreed “valuable offering” of the one who accepts the valid Bond to then offer or do something in return; and

(vi) A valid Bond must have at least one penalty clause, that may or may not be associated with the prior good, or bill or contract or thing in question, that comes into effect if the one who makes or issues a valid Bond defaults on the performance of the condition clause(s); and

(vii) A valid Bond may (or may not) have one or more defeasance clauses that annul and void the penalty clauses in the event the one who makes or issues a valid Bond performs the conditions specified; and

(viii) A valid Bond may (or may not) be dated or have an expiry date or identify the place where it was made. Yet a Plaintiff in any declaration of action must lay a place where it was made; and

(ix) A valid Bond that possesses an expiry date is termed the maturity date; and

(x) The summary operative elements of a valid Bond must be recorded in a Register and possess a unique entry number, usually distinguished in red ink. The unique entry in the Register is proof of the maker or issuer of a valid Bond being issued to another party; and

(xi) A valid Bond requires then the one who makes or issues a valid Bond to “bind” themselves, usually through a promise to the condition clause(s) under sign, seal and delivery of the Bond as a form of original Deed Poll on a single sheet of paper, or parchment or vellum with the unique Register number clearly visible; and

(xii) The Conditions and Penalties of the valid Bond are normally on the reverse side of the single sheet of paper, or parchment or vellum; and

(xiii) If a Penalty clause makes provision for a debt, then this is normally called the Penal Sum; and

(xiv) The one who makes or issues a valid Bond is called the Obligor (also Issuer); and

(xv) The one to whom the obligation is due and who accepts the valid Bond as a right and security is called the Obligee; and

(xvi) The one who holds the benefit of the Bond is called the Holder and may or may not be the Obligee; and

(xvii) If a valid Bond permits negotiation or transfer, then the Obligee normally will endorse the original at 90 degrees on the face (obverse) or reverse of instrument; and

(xviii) If a valid Bond permits periodic payments to be redeemed, these are normally called Coupons and by tradition represented smaller printed forms at the bottom of the Instrument to be redeemed with the Obligor; and

(xix) Once a Coupon is redeemed, or a Bond is redeemed at maturity, it is cancelled on its face and over any signature or seal by two or three lines. Similarly, the record in the Bond register is cancelled by having a single line through it, representing the cancellation of all obligations.

In terms of issues that may defeat or void a Bond:

(i) All persons who are not permitted to contract and whom the law supposes do not have sufficient freedom or comprehension, are not permitted to Bond; and

(ii) Notwithstanding contradictions in Western-Roman Law on Infants contracting, the Bond of any person considered an infant, or lunatic, or idiot is void from the beginning; and

(iii) Any condition expressed in a Bond that is impossible, or contrary to law or to demand to do a thing considered malum in se (self evidently a crime) renders a Bond void from the beginning; and

(iv) A Bond whereby neither principal or interest has been demanded for an extended period of time is presumed to be satisfied and no longer in effect; and

(v) A change in relation between the Obligor and Obligee whereby either becomes the executor or duly appointed fiduciary to the other and one or more assets of value are assigned or reassigned in the process, then the Bond is released; and

(vi) A material change in relation to the underlying condition, status, ownership, custody of the good, or bill, or contract or thing whereby the Bond relates may render the Bond inoperative and void; and

(vii) A release to one Obligor to a Bond is a release to all Obligors, both in law and equity; and

(viii) Alterations or erasures on the face of the Bond, will render a Bond instrument void.

In terms of the broad categories of Bond, there are essentially six main types being Penal, Customs, Treasury, Government, Investment and Insurance:

(i) Penal Bond, also known as a Bail Bond and a Surety Bond, is where the Obligor as the Surety promises to pay the Obligee a financial penalty (Penal Sum) for any non-performance, or error, or omission or dishonesty by the Principal as the Thing and Legal Person under the Custody of the Obligor; and

(ii) Customs Bond, is where the Obligor (Merchant) promises to pay the Obligee (Government or Private Customs Firm) any fees due as duty or excise on the goods held in custody by the Obligee against the value according to the Bill of Lading or Bill of Sale; and

(iii) Treasury Bond, also known as a Prize Bond is where the Obligor (Privateer) promises to pay the Obligee (Government or Military) a share of the value of goods seized and deposited with the treasury as spoils of war under Admiralty Law until the questions of law concerning the seizure of the prize held in custody has been resolved; and

(iv) Government Bond, also known as a Sovereign Bond and Municipal Bonds is where the Obligor (Government or Government Agency) promises to pay the Obligee a rate of periodic payments (as interest) and the redemption of the principal loan against some underlying asset (eg annuities), or stock (eg central bank stock) or debt (eg government debentures); and

(v) Commercial Bond, also known as a Commercial Paper is where the Obligor (Corporation) promises to pay the Obligee according to some terms on the repayment of money, against some underlying asset such as a contract, or cover note, or factor; and

(vi) Insurance Bond, also known as an Investment Bond is where the Obligor (Insurer) promises to pay the Obligee (Insured) a sum of money upon an event or loss or upon as fixed time, in exchange for regular payments called “premiums” against the Principal as the life insured in custody of the Obligor.

By definition all Property, Rights, Title and Uses are derived from One Heaven through the most sacred covenant Pactum de Singularis Caelum in accord with these Canons. Therefore, all valid Bonds are subject to these Canons.

Any ordinance, regulation, statute, prescript, rescript, deed or decree that is in contradiction to these present Canons in relation to a valid Bond is hereby null and void from the beginning, having no force or effect.

Any Bond that is deliberately misleading or deceptive as to its nature, intention, function, effect, terms, obligations is automatically null and void from the beginning.