I Negotiability, Negotiable Instruments, and the Law of Bills, Notes, and Cheques

Subject(s):

International financial law — International monetary law — Codification

This chapter examines the basic concept of ‘negotiability’ as the transferability of an instrument embodying monetary claims by its physical delivery—possibly free of adverse claims and contract defences to liability under it. Accordingly, one of the typical features of a negotiable instrument is that it may be divorced from the underlying causes and has to be judged on its own merits, independent from the bargain from which the instrument originated and the underlying contract. The chapter then looks at the principal instruments that, subsequent to their emergence and earlier development, were accorded with the quality of negotiability. These instruments are bills of exchange, promissory notes, and cheques. The chapter also discusses the rules governing liability under and transfer of such instruments as a crystallization of the general rules of contract and tangible property, and describes their contemporary uses. Moreover, it outlines early national codification, major difference among the global systems, and major international efforts to unify and substantively harmonize this area of law.