THE NEGOTIABLE

INSTRUMENTS
LAW
Pros. Don Ada Dupio

Function and importance of

negotiable
instruments
1.

As

a substitute for money.

2. As

a medium of exchange for

most commercial transactions.

3. As

a
medium
transactions.

of

credit

Characteristics or features of
negotiable instruments.
1.

Negotiability - that quality or attribute of a

bill or note whereby it may pass from hand
to hand similar to money;

2.

Accumulation of secondary contracts Once an instrument is issued, additional

parties can become involved.

The theory of negotiable instruments.

The

theory
of
negotiable
instruments, and of their currency
from hand to hand, rests upon the
proposition that they appear to
belong to the person having them
in possession and to no one else.

Forms of negotiable instruments.

Promissory Note - or those in which the issuer has

promised to pay.

Bills of Exchange - or those in which the issuer has ordered

a third person to pay.

Bank Drafts - A bank draft is a payment on behalf of a payer

that is guaranteed by the issuing bank.

Obtaining a bank draft requires depositing funds equal to the check

amount and applicable fees with the issuing bank. The bank creates a
check to the payee drawn on the banks own account. The remitters
name is noted on the check, but the bank is the entity making the
payment. A bank cashier or officer signs the check.

ABanker's Acceptance, orBA, is a promised future payment,

ortime draft, which is accepted and guaranteed by a bankand
drawn on a deposit at the bank.

Trade Acceptance - is a time draft drawn by the seller of goods

on a buyer. In atrade acceptance, the buyer is the acceptor.

Certificate of Deposit

Bank Draft

Commercial Papers With Limited

Negotiability
1.

Document of Title

2.

Letter of Credit

3.

Trust Receipt

4.

Certificate of Stock

5.

Pawn ticket

6.

Treasury Warrant

7.

Postal Money Order