Negotiable Instruments
Negotiable Instruments Law
Negotiable Instruments, In General
Function and importance of negotiable instruments
• Although they do not constitute legal tender, they are used as a substitute for money.
• Negotiable papers, particularly checks, constitute, at present, the media of exchange for most commercial transactions.
• Negotiable instruments also serve as a medium of credit transactions.
• Negotiable instruments shall produce the effect of payment only when they have been encashed or when through the fault of the creditor they have been impaired. [Article 1249, Civil Code]
Characteristics of negotiable instruments
• Negotiability: That quality or attribute whereby a bill, note or check passes or may pass from hand to hand, similar to money, so as to give the holder in due course the right to hold the instrument and collect the sum payable for himself free from defenses.
• The most important feature of negotiable instruments is the accumulation of secondary contracts as they are transferred from one person to another.
Common forms of negotiable instruments
1. Bill of exchange
2. Promissory note
3. Check
Bill of exchange
• A bill of exchange is an unconditional order in writing addressed by one person to another, signed by the person giving it, requiring the person to whom it is addressed to pay on demand or at a fixed or determinable future time a sum certain in money to order or to bearer. [Section 126, Negotiable Instruments Law]
Promissory note
• A negotiable promissory note is an unconditional promise in writing made by one person to another, signed by the maker, engaging to pay on demand or at a fixed or determinable future time a sum certain in money to order or to bearer. [Section 184, Negotiable Instruments Law]
Check
• A check is a bill of exchange drawn on a bank and payable on demand. [Section 185, Negotiable Instruments Law]
Kinds of bill of exchange
1.
Negotiable Instruments, In General
Function and importance of negotiable instruments
• Although they do not constitute legal tender, they are used as a substitute for money.
• Negotiable papers, particularly checks, constitute, at present, the media of exchange for most commercial transactions.
• Negotiable instruments also serve as a medium of credit transactions.
• Negotiable instruments shall produce the effect of payment only when they have been encashed or when through the fault of the creditor they have been impaired. [Article 1249, Civil Code]
Characteristics of negotiable instruments
• Negotiability: That quality or attribute whereby a bill, note or check passes or may pass from hand to hand, similar to money, so as to give the holder in due course the right to hold the instrument and collect the sum payable for himself free from defenses.
• The most important feature of negotiable instruments is the accumulation of secondary contracts as they are transferred from one person to another.
Common forms of negotiable instruments
1. Bill of exchange
2. Promissory note
3. Check
Bill of exchange
• A bill of exchange is an unconditional order in writing addressed by one person to another, signed by the person giving it, requiring the person to whom it is addressed to pay on demand or at a fixed or determinable future time a sum certain in money to order or to bearer. [Section 126, Negotiable Instruments Law]
Promissory note
• A negotiable promissory note is an unconditional promise in writing made by one person to another, signed by the maker, engaging to pay on demand or at a fixed or determinable future time a sum certain in money to order or to bearer. [Section 184, Negotiable Instruments Law]
Check
• A check is a bill of exchange drawn on a bank and payable on demand. [Section 185, Negotiable Instruments Law]
Kinds of bill of exchange
1.