==============================  CFJ 1352  ==============================

    The last paragraph of rule 1969 does not prohibit transferring Bonds
    that have already been redeemed.

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Caller:                                 Sir Toby

Judge:                                  Steve
Judgement:                              TRUE

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History:

Called by Sir Toby:                     21 Apr 2002 22:07:39 GMT
Assigned to Steve:                      29 Apr 2002 15:12:14 GMT
Judged TRUE by Steve:                   02 May 2002 06:52:00 GMT
Appealed by Maud:                       12 May 2002 23:26:35 GMT

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Caller's Arguments:

The species of a Bond does not indicate whether or not a Bond has
already been redeemed. Since all Bonds of the same species are fungible,
it is impossible to treat Bonds that have been redeemed differently from
Bonds that have not been redeemed. I argue that rule 1969 conflicts with
rule 1966. Both rules are of the same power. Neither rule states that it
defers to, or takes precedence over the other. I argue that rule 1966
takes precedence over rule 1969, according to rule 1030, leaving the
last paragraph of rule 1969 without force.

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Caller's Evidence:

Rule 1966, in part:

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A species of Bond consists of all Bonds with the same issuer, face value
and maturity date.  All Bonds of a given species are fungible.  In any
transaction involving Bonds, it is sufficient to identify the Bonds
involved by species.
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The last paragraph of rule 1969:

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Once redeemed, a Bond may not be further transferred.
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Judge Steve's Arguments:

The thrust of Sir Toby's seems correct to me. I therefore Judge the
Statement to be TRUE.

I note a small lacuna in the argument, though. Strictly speaking, the
fungibility of Bonds of the same species does not imply that it is
impossible to treat Bonds that have been redeemed differently from Bonds
that have not been redeemed. For if I own only redeemed Bonds of a
species, and you own only unredeemed Bonds of that species, we can treat
the Bonds differently on the basis of their ownership.

However, this is unimportant for Sir Toby's argument, which correctly
points to a mistake in the drafting of the original Bond legislation.
'Fungible' means 'interchangeable' (for some purpose or other), and it
is clear that a redeemed Bond is not, or ought not to be, interchangeable
with an unredeemed Bond. It is therefore a mistake to regard all Bonds
of the same species as fungible.

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