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class="vector-toc-text"> <span class="vector-toc-numb">6</span> <span>In the United States</span> </div> </a> <button aria-controls="toc-In_the_United_States-sublist" class="cdx-button cdx-button--weight-quiet cdx-button--icon-only vector-toc-toggle"> <span class="vector-icon mw-ui-icon-wikimedia-expand"></span> <span>Toggle In the United States subsection</span> </button> <ul id="toc-In_the_United_States-sublist" class="vector-toc-list"> <li id="toc-Negotiation_and_endorsement" class="vector-toc-list-item vector-toc-level-2"> <a class="vector-toc-link" href="#Negotiation_and_endorsement"> <div class="vector-toc-text"> <span class="vector-toc-numb">6.1</span> <span>Negotiation and endorsement</span> </div> </a> <ul id="toc-Negotiation_and_endorsement-sublist" class="vector-toc-list"> </ul> </li> <li id="toc-Usage" class="vector-toc-list-item vector-toc-level-2"> <a class="vector-toc-link" href="#Usage"> <div class="vector-toc-text"> <span class="vector-toc-numb">6.2</span> <span>Usage</span> </div> </a> <ul id="toc-Usage-sublist" class="vector-toc-list"> </ul> </li> <li id="toc-Exceptions" class="vector-toc-list-item vector-toc-level-2"> <a class="vector-toc-link" href="#Exceptions"> <div class="vector-toc-text"> <span class="vector-toc-numb">6.3</span> <span>Exceptions</span> </div> </a> <ul id="toc-Exceptions-sublist" class="vector-toc-list"> </ul> </li> </ul> </li> <li id="toc-Modern_relevance" class="vector-toc-list-item vector-toc-level-1 vector-toc-list-item-expanded"> <a class="vector-toc-link" href="#Modern_relevance"> <div class="vector-toc-text"> <span class="vector-toc-numb">7</span> <span>Modern relevance</span> </div> </a> <ul id="toc-Modern_relevance-sublist" class="vector-toc-list"> </ul> </li> <li id="toc-See_also" class="vector-toc-list-item vector-toc-level-1 vector-toc-list-item-expanded"> <a class="vector-toc-link" href="#See_also"> <div class="vector-toc-text"> <span class="vector-toc-numb">8</span> <span>See also</span> </div> </a> <ul id="toc-See_also-sublist" class="vector-toc-list"> </ul> </li> <li id="toc-References" class="vector-toc-list-item vector-toc-level-1 vector-toc-list-item-expanded"> <a class="vector-toc-link" href="#References"> <div class="vector-toc-text"> <span class="vector-toc-numb">9</span> <span>References</span> </div> </a> <ul id="toc-References-sublist" class="vector-toc-list"> </ul> </li> <li id="toc-External_links" class="vector-toc-list-item vector-toc-level-1 vector-toc-list-item-expanded"> <a class="vector-toc-link" href="#External_links"> <div class="vector-toc-text"> <span class="vector-toc-numb">10</span> <span>External links</span> </div> </a> <ul id="toc-External_links-sublist" class="vector-toc-list"> </ul> </li> </ul> </div> </div> </nav> </div> </div> <div class="mw-content-container"> <main id="content" class="mw-body"> <header class="mw-body-header vector-page-titlebar"> <nav aria-label="Contents" class="vector-toc-landmark"> <div id="vector-page-titlebar-toc" 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class="mw-page-title-main">Negotiable instrument</span></h1> <div id="p-lang-btn" class="vector-dropdown mw-portlet mw-portlet-lang" > <input type="checkbox" id="p-lang-btn-checkbox" role="button" aria-haspopup="true" data-event-name="ui.dropdown-p-lang-btn" class="vector-dropdown-checkbox mw-interlanguage-selector" aria-label="Go to an article in another language. Available in 23 languages" > <label id="p-lang-btn-label" for="p-lang-btn-checkbox" class="vector-dropdown-label cdx-button cdx-button--fake-button cdx-button--fake-button--enabled cdx-button--weight-quiet cdx-button--action-progressive mw-portlet-lang-heading-23" aria-hidden="true" ><span class="vector-icon mw-ui-icon-language-progressive mw-ui-icon-wikimedia-language-progressive"></span> <span class="vector-dropdown-label-text">23 languages</span> </label> <div class="vector-dropdown-content"> <div class="vector-menu-content"> <ul class="vector-menu-content-list"> <li class="interlanguage-link interwiki-ar mw-list-item"><a href="https://ar.wikipedia.org/wiki/%D8%A3%D9%88%D8%B1%D8%A7%D9%82_%D8%AA%D8%AC%D8%A7%D8%B1%D9%8A%D8%A9" title="أوراق تجارية – Arabic" lang="ar" hreflang="ar" data-title="أوراق تجارية" data-language-autonym="العربية" data-language-local-name="Arabic" class="interlanguage-link-target"><span>العربية</span></a></li><li class="interlanguage-link interwiki-as mw-list-item"><a href="https://as.wikipedia.org/wiki/%E0%A6%B9%E0%A6%B8%E0%A7%8D%E0%A6%A4%E0%A6%BE%E0%A6%A8%E0%A7%8D%E0%A6%A4%E0%A7%B0%E0%A6%AF%E0%A7%8B%E0%A6%97%E0%A7%8D%E0%A6%AF_%E0%A6%AA%E0%A6%A4%E0%A7%8D%E0%A7%B0" title="হস্তান্তৰযোগ্য পত্ৰ – Assamese" lang="as" hreflang="as" data-title="হস্তান্তৰযোগ্য পত্ৰ" data-language-autonym="অসমীয়া" data-language-local-name="Assamese" class="interlanguage-link-target"><span>অসমীয়া</span></a></li><li class="interlanguage-link interwiki-da mw-list-item"><a href="https://da.wikipedia.org/wiki/Veksel_(dokument)" title="Veksel (dokument) – Danish" lang="da" hreflang="da" data-title="Veksel (dokument)" data-language-autonym="Dansk" data-language-local-name="Danish" class="interlanguage-link-target"><span>Dansk</span></a></li><li class="interlanguage-link interwiki-es mw-list-item"><a href="https://es.wikipedia.org/wiki/T%C3%ADtulo_de_cr%C3%A9dito" title="Título de crédito – Spanish" lang="es" hreflang="es" data-title="Título de crédito" data-language-autonym="Español" data-language-local-name="Spanish" class="interlanguage-link-target"><span>Español</span></a></li><li class="interlanguage-link interwiki-eo mw-list-item"><a href="https://eo.wikipedia.org/wiki/Bilo" title="Bilo – Esperanto" lang="eo" hreflang="eo" data-title="Bilo" data-language-autonym="Esperanto" data-language-local-name="Esperanto" class="interlanguage-link-target"><span>Esperanto</span></a></li><li class="interlanguage-link interwiki-eu mw-list-item"><a href="https://eu.wikipedia.org/wiki/Balore-titulu" title="Balore-titulu – Basque" lang="eu" hreflang="eu" data-title="Balore-titulu" data-language-autonym="Euskara" data-language-local-name="Basque" class="interlanguage-link-target"><span>Euskara</span></a></li><li class="interlanguage-link interwiki-fa mw-list-item"><a href="https://fa.wikipedia.org/wiki/%D8%A8%D8%B1%D8%A7%D8%AA" title="برات – Persian" lang="fa" hreflang="fa" data-title="برات" data-language-autonym="فارسی" data-language-local-name="Persian" class="interlanguage-link-target"><span>فارسی</span></a></li><li class="interlanguage-link interwiki-fr mw-list-item"><a href="https://fr.wikipedia.org/wiki/Effet_de_commerce" title="Effet de commerce – French" lang="fr" hreflang="fr" data-title="Effet de commerce" data-language-autonym="Français" data-language-local-name="French" class="interlanguage-link-target"><span>Français</span></a></li><li class="interlanguage-link interwiki-fy mw-list-item"><a href="https://fy.wikipedia.org/wiki/Weardepapieren" title="Weardepapieren – Western Frisian" lang="fy" hreflang="fy" data-title="Weardepapieren" data-language-autonym="Frysk" data-language-local-name="Western Frisian" class="interlanguage-link-target"><span>Frysk</span></a></li><li class="interlanguage-link interwiki-hy mw-list-item"><a href="https://hy.wikipedia.org/wiki/%D5%8E%D5%A1%D6%80%D5%AF%D5%A1%D5%B5%D5%AB%D5%B6_%D5%B7%D6%80%D5%BB%D5%A1%D5%B6%D5%A1%D5%BC%D5%B8%D6%82%D5%A9%D5%B5%D5%A1%D5%B6_%D6%87_%D5%BE%D5%B3%D5%A1%D6%80%D5%B4%D5%A1%D5%B6_%D5%B4%D5%AB%D5%BB%D5%B8%D6%81%D5%B6%D5%A5%D6%80" title="Վարկային շրջանառության և վճարման միջոցներ – Armenian" lang="hy" hreflang="hy" data-title="Վարկային շրջանառության և վճարման միջոցներ" data-language-autonym="Հայերեն" data-language-local-name="Armenian" class="interlanguage-link-target"><span>Հայերեն</span></a></li><li class="interlanguage-link interwiki-hi mw-list-item"><a href="https://hi.wikipedia.org/wiki/%E0%A4%AA%E0%A4%B0%E0%A4%95%E0%A5%8D%E0%A4%B0%E0%A4%BE%E0%A4%AE%E0%A5%8D%E0%A4%AF_%E0%A4%B2%E0%A4%BF%E0%A4%96%E0%A4%A4" title="परक्राम्य लिखत – Hindi" lang="hi" hreflang="hi" data-title="परक्राम्य लिखत" data-language-autonym="हिन्दी" data-language-local-name="Hindi" class="interlanguage-link-target"><span>हिन्दी</span></a></li><li class="interlanguage-link interwiki-is mw-list-item"><a href="https://is.wikipedia.org/wiki/Vi%C3%B0skiptabr%C3%A9f" title="Viðskiptabréf – Icelandic" lang="is" hreflang="is" data-title="Viðskiptabréf" data-language-autonym="Íslenska" data-language-local-name="Icelandic" class="interlanguage-link-target"><span>Íslenska</span></a></li><li class="interlanguage-link interwiki-it mw-list-item"><a href="https://it.wikipedia.org/wiki/Titoli_di_credito" title="Titoli di credito – Italian" lang="it" hreflang="it" data-title="Titoli di credito" data-language-autonym="Italiano" data-language-local-name="Italian" class="interlanguage-link-target"><span>Italiano</span></a></li><li class="interlanguage-link interwiki-he mw-list-item"><a href="https://he.wikipedia.org/wiki/%D7%A9%D7%98%D7%A8" title="שטר – Hebrew" lang="he" hreflang="he" data-title="שטר" data-language-autonym="עברית" data-language-local-name="Hebrew" class="interlanguage-link-target"><span>עברית</span></a></li><li class="interlanguage-link interwiki-kn mw-list-item"><a href="https://kn.wikipedia.org/wiki/%E0%B2%A8%E0%B3%86%E0%B2%97%E0%B3%8B%E0%B2%B6%E0%B2%AC%E0%B2%B2%E0%B3%8D_%E0%B2%87%E0%B2%A8%E0%B3%8D%E0%B2%B8%E0%B3%8D%E0%B2%9F%E0%B3%8D%E0%B2%B0%E0%B3%81%E0%B2%AE%E0%B3%86%E0%B2%82%E0%B2%9F%E0%B3%8D" title="ನೆಗೋಶಬಲ್ ಇನ್ಸ್ಟ್ರುಮೆಂಟ್ – Kannada" lang="kn" hreflang="kn" data-title="ನೆಗೋಶಬಲ್ ಇನ್ಸ್ಟ್ರುಮೆಂಟ್" data-language-autonym="ಕನ್ನಡ" data-language-local-name="Kannada" class="interlanguage-link-target"><span>ಕನ್ನಡ</span></a></li><li class="interlanguage-link interwiki-ja mw-list-item"><a href="https://ja.wikipedia.org/wiki/%E7%82%BA%E6%9B%BF%E6%89%8B%E5%BD%A2" title="為替手形 – Japanese" lang="ja" hreflang="ja" data-title="為替手形" data-language-autonym="日本語" data-language-local-name="Japanese" class="interlanguage-link-target"><span>日本語</span></a></li><li class="interlanguage-link interwiki-no mw-list-item"><a href="https://no.wikipedia.org/wiki/Veksel" title="Veksel – Norwegian Bokmål" lang="nb" hreflang="nb" data-title="Veksel" data-language-autonym="Norsk bokmål" data-language-local-name="Norwegian Bokmål" class="interlanguage-link-target"><span>Norsk bokmål</span></a></li><li class="interlanguage-link interwiki-nn mw-list-item"><a href="https://nn.wikipedia.org/wiki/Veksel" title="Veksel – Norwegian Nynorsk" lang="nn" hreflang="nn" data-title="Veksel" data-language-autonym="Norsk nynorsk" data-language-local-name="Norwegian Nynorsk" class="interlanguage-link-target"><span>Norsk nynorsk</span></a></li><li class="interlanguage-link interwiki-pt mw-list-item"><a href="https://pt.wikipedia.org/wiki/T%C3%ADtulo_de_cr%C3%A9dito" title="Título de crédito – Portuguese" lang="pt" hreflang="pt" data-title="Título de crédito" data-language-autonym="Português" data-language-local-name="Portuguese" class="interlanguage-link-target"><span>Português</span></a></li><li class="interlanguage-link interwiki-ru mw-list-item"><a href="https://ru.wikipedia.org/wiki/%D0%9A%D1%80%D0%B5%D0%B4%D0%B8%D1%82%D0%BD%D1%8B%D0%B5_%D1%81%D1%80%D0%B5%D0%B4%D1%81%D1%82%D0%B2%D0%B0_%D0%BE%D0%B1%D1%80%D0%B0%D1%89%D0%B5%D0%BD%D0%B8%D1%8F_%D0%B8_%D0%BF%D0%BB%D0%B0%D1%82%D0%B5%D0%B6%D0%B0" title="Кредитные средства обращения и платежа – Russian" lang="ru" hreflang="ru" data-title="Кредитные средства обращения и платежа" data-language-autonym="Русский" data-language-local-name="Russian" class="interlanguage-link-target"><span>Русский</span></a></li><li class="interlanguage-link interwiki-sv mw-list-item"><a href="https://sv.wikipedia.org/wiki/Skuldebrev" title="Skuldebrev – Swedish" lang="sv" hreflang="sv" data-title="Skuldebrev" data-language-autonym="Svenska" data-language-local-name="Swedish" class="interlanguage-link-target"><span>Svenska</span></a></li><li class="interlanguage-link interwiki-tg mw-list-item"><a href="https://tg.wikipedia.org/wiki/%D0%91%D0%B0%D1%80%D0%BE%D1%82" title="Барот – Tajik" lang="tg" hreflang="tg" data-title="Барот" data-language-autonym="Тоҷикӣ" data-language-local-name="Tajik" class="interlanguage-link-target"><span>Тоҷикӣ</span></a></li><li class="interlanguage-link interwiki-zh mw-list-item"><a href="https://zh.wikipedia.org/wiki/%E6%B1%87%E7%A5%A8" title="汇票 – Chinese" lang="zh" hreflang="zh" data-title="汇票" data-language-autonym="中文" data-language-local-name="Chinese" class="interlanguage-link-target"><span>中文</span></a></li> </ul> <div class="after-portlet after-portlet-lang"><span class="wb-langlinks-edit wb-langlinks-link"><a href="https://www.wikidata.org/wiki/Special:EntityPage/Q3359388#sitelinks-wikipedia" title="Edit interlanguage links" class="wbc-editpage">Edit links</a></span></div> </div> </div> </div> </header> <div class="vector-page-toolbar"> <div class="vector-page-toolbar-container"> <div id="left-navigation"> <nav aria-label="Namespaces"> <div id="p-associated-pages" class="vector-menu vector-menu-tabs mw-portlet mw-portlet-associated-pages" > <div 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data-mw-ve-target-container> <div class="vector-body-before-content"> <div class="mw-indicators"> </div> <div id="siteSub" class="noprint">From Wikipedia, the free encyclopedia</div> </div> <div id="contentSub"><div id="mw-content-subtitle"></div></div> <div id="mw-content-text" class="mw-body-content"><div class="mw-content-ltr mw-parser-output" lang="en" dir="ltr"><div class="shortdescription nomobile noexcerpt noprint searchaux" style="display:none">Contract document exchangeable for money</div> <figure class="mw-default-size mw-halign-right" typeof="mw:File/Thumb"><a href="/wiki/File:R1000_Rangoon_1939_promissory_note.jpg" class="mw-file-description"><img src="//upload.wikimedia.org/wikipedia/commons/thumb/4/48/R1000_Rangoon_1939_promissory_note.jpg/220px-R1000_Rangoon_1939_promissory_note.jpg" decoding="async" width="220" height="175" class="mw-file-element" srcset="//upload.wikimedia.org/wikipedia/commons/thumb/4/48/R1000_Rangoon_1939_promissory_note.jpg/330px-R1000_Rangoon_1939_promissory_note.jpg 1.5x, //upload.wikimedia.org/wikipedia/commons/thumb/4/48/R1000_Rangoon_1939_promissory_note.jpg/440px-R1000_Rangoon_1939_promissory_note.jpg 2x" data-file-width="1588" data-file-height="1266" /></a><figcaption>A 1939 promissory note, Rangoon, Burma</figcaption></figure> <p>A <b>negotiable instrument</b> is a document guaranteeing the payment of a specific amount of <a href="/wiki/Money" title="Money">money</a>, either on demand, or at a set time, whose payer is usually named on the document. More specifically, it is a document contemplated by or consisting of a <a href="/wiki/Contract" title="Contract">contract</a>, which promises the payment of money without condition, which may be paid either on demand or at a future date. The term has different meanings, depending on its use in the application of different laws and depending on countries and contexts. The word "negotiable" refers to transferability, and "<a href="/wiki/Legal_instrument" title="Legal instrument">instrument</a>" refers to a document giving legal effect by the virtue of the law. </p> <meta property="mw:PageProp/toc" /> <div class="mw-heading mw-heading2"><h2 id="Concept_of_negotiability">Concept of negotiability</h2><span class="mw-editsection"><span class="mw-editsection-bracket">[</span><a href="/w/index.php?title=Negotiable_instrument&action=edit&section=1" title="Edit section: Concept of negotiability"><span>edit</span></a><span class="mw-editsection-bracket">]</span></span></div> <p><a href="/wiki/William_Searle_Holdsworth" title="William Searle Holdsworth">William Searle Holdsworth</a> defines the concept of negotiability as follows:<sup id="cite_ref-1" class="reference"><a href="#cite_note-1"><span class="cite-bracket">[</span>1<span class="cite-bracket">]</span></a></sup> </p> <ol><li>Negotiable instruments are transferable under the following circumstances: they are transferable by delivery where they are made payable to the bearer, they are transferable by delivery and endorsement where they are made payable to order.</li> <li><a href="/wiki/Consideration_(law)" class="mw-redirect" title="Consideration (law)">Consideration</a> is presumed.</li> <li>The transferee acquires a good title, even though the transferor had a defective or no title.</li></ol> <div class="mw-heading mw-heading2"><h2 id="Jurisdictions">Jurisdictions</h2><span class="mw-editsection"><span class="mw-editsection-bracket">[</span><a href="/w/index.php?title=Negotiable_instrument&action=edit&section=2" title="Edit section: Jurisdictions"><span>edit</span></a><span class="mw-editsection-bracket">]</span></span></div> <p>In the <a href="/wiki/Commonwealth_of_Nations" title="Commonwealth of Nations">Commonwealth of Nations</a> almost all jurisdictions have codified the law relating to negotiable instruments in a Bills of Exchange Act, e.g. <a href="/wiki/Bills_of_Exchange_Act_1882" title="Bills of Exchange Act 1882">Bills of Exchange Act 1882</a> in the UK, Bills of Exchange Act 1890 in Canada, <a href="/wiki/Bills_of_Exchange_Act_1908" title="Bills of Exchange Act 1908">Bills of Exchange Act 1908</a> in New Zealand, Bills of Exchange Act 1909 in Australia,<sup id="cite_ref-2" class="reference"><a href="#cite_note-2"><span class="cite-bracket">[</span>2<span class="cite-bracket">]</span></a></sup> the <a href="/wiki/Negotiable_Instruments_Act,_1881" title="Negotiable Instruments Act, 1881">Negotiable Instruments Act, 1881</a> in India and the Bills of Exchange Act 1914 in Mauritius. </p><p>Additionally most Commonwealth jurisdictions have separate Cheques Acts providing for additional protections for bankers collecting unendorsed or irregularly endorsed <a href="/wiki/Cheque" title="Cheque">cheques</a>, providing that cheques that are crossed and marked 'not negotiable' or similar are not transferable, and providing for electronic presentation of cheques in inter-bank cheque clearing systems. </p> <div class="mw-heading mw-heading2"><h2 id="History">History</h2><span class="mw-editsection"><span class="mw-editsection-bracket">[</span><a href="/w/index.php?title=Negotiable_instrument&action=edit&section=3" title="Edit section: History"><span>edit</span></a><span class="mw-editsection-bracket">]</span></span></div> <p>In India, during the Mauryan period in the 3rd century BC, an instrument called <a href="/wiki/Adesha#Mercantile_usage" class="mw-redirect" title="Adesha">adesha</a> was in use, which was an order on a banker desiring him to pay the money of the note to a third person, which corresponds to the definition of a bill of exchange as we understand it today. </p><p>The ancient Romans are believed to have used an early form of cheque known as <i>praescriptiones</i> in the 1st century BC<sup id="cite_ref-Durant_3-0" class="reference"><a href="#cite_note-Durant-3"><span class="cite-bracket">[</span>3<span class="cite-bracket">]</span></a></sup> and 2,000-year-old Roman <a href="/wiki/Promissory_note" title="Promissory note">promissory notes</a> have been found.<sup id="cite_ref-4" class="reference"><a href="#cite_note-4"><span class="cite-bracket">[</span>4<span class="cite-bracket">]</span></a></sup> </p><p>Common prototypes of bills of exchanges and promissory notes originated in <a href="/wiki/China" title="China">China</a>, where special instruments called <i>fey tsien</i> which were used to safely transfer money over long distances during the reign of the <a href="/wiki/Tang_dynasty" title="Tang dynasty">Tang dynasty</a> in the 8th century.<sup id="cite_ref-5" class="reference"><a href="#cite_note-5"><span class="cite-bracket">[</span>5<span class="cite-bracket">]</span></a></sup><sup class="noprint Inline-Template" style="white-space:nowrap;">[<i><a href="/wiki/Wikipedia:Verifiability#Self-published_sources" title="Wikipedia:Verifiability"><span title="The material near this tag may rely on a self-published source. (December 2017)">self-published source</span></a></i>]</sup> </p><p>In about 1150 the <a href="/wiki/History_of_the_Knights_Templar#Bankers" title="History of the Knights Templar">Knights Templar</a> issued an early form of bank notes to departing pilgrims in exchange for a deposit of valuables at a local Templar preceptory in a European country, which could be cashed by the pilgrim concerned on arrival in the Holy Land, by presenting the note to a Templar preceptory there.<sup id="cite_ref-6" class="reference"><a href="#cite_note-6"><span class="cite-bracket">[</span>6<span class="cite-bracket">]</span></a></sup><sup id="cite_ref-7" class="reference"><a href="#cite_note-7"><span class="cite-bracket">[</span>7<span class="cite-bracket">]</span></a></sup> </p><p>In the mid-13th century, the <a href="/wiki/Ilkhanid" class="mw-redirect" title="Ilkhanid">Ilkhanid</a> rulers of <a href="/wiki/Persia" class="mw-redirect" title="Persia">Persia</a> printed the "cha" or "chap" which was used as paper money for limited use for transactions between the court and the merchants for about three years before it collapsed. The collapse was caused by the court accepting the "cha" only at progressive discount. </p><p>Later, such documents were used for money transfer by Middle Eastern merchants, who had used the prototypes of bills of exchange ("<a href="/w/index.php?title=Suftadja&action=edit&redlink=1" class="new" title="Suftadja (page does not exist)">suftadja</a>" or "<a href="/wiki/Softa" title="Softa">softa</a>") from the 8th century to present. Such prototypes came to be used later by the Iberian and Italian merchants in the 12th century. In Italy in the 13–15th centuries, bills of exchange and promissory notes obtained their main features, while further phases of their development have been associated with France (16–18th centuries, where the endorsement had appeared) and Germany (19th century, formalization of Exchange Law). The first mention of the use of bills of exchange in English statutes dates from 1381, under <a href="/wiki/Richard_II_of_England" title="Richard II of England">Richard II</a>; the statute mandates the use of such instruments in England, and prohibits the future export of gold and silver <a href="/wiki/Commodity_money" title="Commodity money">specie</a>, in any form, to settle foreign commercial transactions.<sup id="cite_ref-8" class="reference"><a href="#cite_note-8"><span class="cite-bracket">[</span>8<span class="cite-bracket">]</span></a></sup> English exchange law was different than continental European law because of different legal systems; the English system was adopted later in the United States.<sup id="cite_ref-9" class="reference"><a href="#cite_note-9"><span class="cite-bracket">[</span>9<span class="cite-bracket">]</span></a></sup> </p><p>In England, two of the main reasons why the use of negotiable instruments became so popular was: </p> <ol><li>Carrying large amounts of coins from one place to the other was deemed unsafe, so the usage of negotiable instruments was to prevent merchants from being robbed of their coins either on land or by sea.</li> <li>During the 1300s, there was an increase in the use of counterfeit English money, so the aim of the English Crown was to eradicate the exchange of genuine English coins for such forgeries as well as foreign goods. As such, statutes such as the Statute of Money of 1335 (<a href="/wiki/9_Edw._3_Stat._2" class="mw-redirect" title="9 Edw. 3 Stat. 2">9 Edw. 3 Stat. 2</a>) and 1379 were implemented to prevent the importation of money that was deemed as counterfeit, and also to prevent the exportation of valuable items like gold and silver in the absence of any special licenses.<sup id="cite_ref-10" class="reference"><a href="#cite_note-10"><span class="cite-bracket">[</span>10<span class="cite-bracket">]</span></a></sup></li></ol> <p>The modern emphasis on negotiability may also be traced to <a href="/wiki/William_Murray,_1st_Earl_of_Mansfield" title="William Murray, 1st Earl of Mansfield">Lord Mansfield</a>.<sup id="cite_ref-Greenlee_11-0" class="reference"><a href="#cite_note-Greenlee-11"><span class="cite-bracket">[</span>11<span class="cite-bracket">]</span></a></sup> Germanic <a href="/wiki/Lombards" title="Lombards">Lombard</a> documents may also have some elements of negotiability.<sup id="cite_ref-Rabinowitz_12-0" class="reference"><a href="#cite_note-Rabinowitz-12"><span class="cite-bracket">[</span>12<span class="cite-bracket">]</span></a></sup> </p> <div class="mw-heading mw-heading2"><h2 id="Distinguished_from_other_types_of_contracts">Distinguished from other types of contracts</h2><span class="mw-editsection"><span class="mw-editsection-bracket">[</span><a href="/w/index.php?title=Negotiable_instrument&action=edit&section=4" title="Edit section: Distinguished from other types of contracts"><span>edit</span></a><span class="mw-editsection-bracket">]</span></span></div> <figure class="mw-default-size mw-halign-right" typeof="mw:File/Thumb"><a href="/wiki/File:British_Foreign_Bill_stamps_on_1870_Oriental_Bank_Corporation_Bill_of_Exchange.jpg" class="mw-file-description"><img src="//upload.wikimedia.org/wikipedia/commons/thumb/c/cc/British_Foreign_Bill_stamps_on_1870_Oriental_Bank_Corporation_Bill_of_Exchange.jpg/220px-British_Foreign_Bill_stamps_on_1870_Oriental_Bank_Corporation_Bill_of_Exchange.jpg" decoding="async" width="220" height="89" class="mw-file-element" srcset="//upload.wikimedia.org/wikipedia/commons/thumb/c/cc/British_Foreign_Bill_stamps_on_1870_Oriental_Bank_Corporation_Bill_of_Exchange.jpg/330px-British_Foreign_Bill_stamps_on_1870_Oriental_Bank_Corporation_Bill_of_Exchange.jpg 1.5x, //upload.wikimedia.org/wikipedia/commons/thumb/c/cc/British_Foreign_Bill_stamps_on_1870_Oriental_Bank_Corporation_Bill_of_Exchange.jpg/440px-British_Foreign_Bill_stamps_on_1870_Oriental_Bank_Corporation_Bill_of_Exchange.jpg 2x" data-file-width="1558" data-file-height="632" /></a><figcaption>An 1870 bill of exchange payable in London, with British <i>Foreign Bill</i> <a href="/wiki/Revenue_stamp" title="Revenue stamp">revenue stamps</a> attached</figcaption></figure> <p>A negotiable instrument can serve to convey value constituting at least part of the performance of a <a href="/wiki/Contract" title="Contract">contract</a>, albeit perhaps not obvious in contract formation, in terms inherent in and arising from the requisite <a href="/wiki/Offer_and_acceptance" title="Offer and acceptance">offer and acceptance</a> and conveyance of consideration. The underlying contract contemplates the right to hold the instrument as, and to negotiate the instrument to, a <i>holder in due course</i>, the payment on which is at least part of the performance of the contract to which the negotiable instrument is linked. The instrument, memorializing: (1) the power to demand payment; and, (2) the right to be paid, can move, for example, in the instance of a "<a href="/wiki/Bearer_instrument" title="Bearer instrument">bearer instrument</a>", wherein the possession of the document itself attributes and ascribes the right to payment. Certain exceptions exist, such as instances of loss or theft of the instrument, wherein the possessor of the note may be a holder, but not necessarily a holder in due course. Negotiation requires a valid <i>endorsement</i> of the negotiable instrument. </p><p>The consideration constituted by a negotiable instrument is cognizable as the value given up to acquire it (benefit) and the consequent loss of value (detriment) to the prior holder; thus, no separate consideration is required to support an accompanying contract assignment. The instrument itself is understood as memorializing the right for, and power to demand, payment, and an obligation for payment evidenced by the instrument itself with possession as a holder in due course being the touchstone for the right to, and power to demand, payment. In some instances, the negotiable instrument can serve as the writing memorializing a contract, thus satisfying any applicable <a href="/wiki/Statute_of_frauds" title="Statute of frauds">statute of frauds</a> as to that contract. </p> <div class="mw-heading mw-heading3"><h3 id="The_holder_in_due_course">The holder in due course</h3><span class="mw-editsection"><span class="mw-editsection-bracket">[</span><a href="/w/index.php?title=Negotiable_instrument&action=edit&section=5" title="Edit section: The holder in due course"><span>edit</span></a><span class="mw-editsection-bracket">]</span></span></div> <p>The rights of a <a href="/wiki/Holder_in_due_course" title="Holder in due course">holder in due course</a> of a negotiable instrument are qualitatively, as matters of law, superior to those provided by ordinary species of contracts: </p> <ul><li>The rights to payment are not subject to <a href="/wiki/Set-off_(law)" title="Set-off (law)">set-off</a>, and do not rely on the validity of the underlying contract giving rise to the debt (for example if a cheque was drawn for payment for goods delivered but defective, the drawer is still liable on the cheque)</li> <li>No notice need be given to any party liable on the instrument for transfer of the rights under the instrument by negotiation. However, payment by the party liable to the person previously entitled to enforce the instrument "counts" as payment on the note until adequate notice has been received by the liable party that a different party is to receive payments from then on. [U.C.C. §3-602(b)]</li> <li>Transfer free of equities—the holder in due course can hold better title than the party he obtains it from (as in the instance of negotiation of the instrument from a mere holder to a holder in due course)</li></ul> <p>Negotiation often enables the transferee to become the party to the contract through a contract assignment (provided for explicitly or by operation of law) and to enforce the contract in the transferee-assignee's own name. Negotiation can be effected by endorsement and delivery (<a href="/w/index.php?title=Order_instrument&action=edit&redlink=1" class="new" title="Order instrument (page does not exist)">order instruments</a>), or by delivery alone (<a href="/wiki/Bearer_instrument" title="Bearer instrument">bearer instruments</a>). </p> <div class="mw-heading mw-heading2"><h2 id="Classes">Classes</h2><span class="mw-editsection"><span class="mw-editsection-bracket">[</span><a href="/w/index.php?title=Negotiable_instrument&action=edit&section=6" title="Edit section: Classes"><span>edit</span></a><span class="mw-editsection-bracket">]</span></span></div> <p>Promissory notes and bills of exchange are two primary types of negotiable instruments. The following chart shows the main differences:<sup id="cite_ref-13" class="reference"><a href="#cite_note-13"><span class="cite-bracket">[</span>13<span class="cite-bracket">]</span></a></sup> </p> <table class="wikitable"> <tbody><tr> <th> </th> <th>Bill of exchange </th> <th>Promissory note </th></tr> <tr> <th>Name </th> <td colspan="2" align="center">The name of the bill or note in the text of the document, in the language in which the document has been issued </td></tr> <tr> <th>Subject </th> <td>Unconditional order for the payment of the specified sum </td> <td>Unconditional assumption of obligation for the payment of the specified sum </td></tr> <tr> <th>Drawee </th> <td>The name of the person obliged to pay (drawee) </td> <td>N/A </td></tr> <tr> <th>Date </th> <td colspan="2" align="center">The specification of the maturity </td></tr> <tr> <th>Place of payment </th> <td colspan="2" align="center">Specification of the place of payment </td></tr> <tr> <th>Payee </th> <td colspan="2" align="center">The name of the person to whose behalf the payment must be effected </td></tr> <tr> <th>Issue date </th> <td colspan="2" align="center">The specification of the date and place of the issuance of the bill or note </td></tr> <tr> <th>Signature </th> <td>The signature of the drawer </td> <td>The signature of the issuer </td></tr></tbody></table> <div class="mw-heading mw-heading3"><h3 id="Promissory_note">Promissory note</h3><span class="mw-editsection"><span class="mw-editsection-bracket">[</span><a href="/w/index.php?title=Negotiable_instrument&action=edit&section=7" title="Edit section: Promissory note"><span>edit</span></a><span class="mw-editsection-bracket">]</span></span></div> <p>Although possibly non-negotiable, a <a href="/wiki/Promissory_note" title="Promissory note">promissory note</a> may be a negotiable instrument if it is an unconditional promise in writing made by one person to another, signed by the maker, engaging to pay on demand to the <i>payee</i>, or at fixed or determinable future time, a sum certain in money, to order or to bearer.<sup class="noprint Inline-Template" style="margin-left:0.1em; white-space:nowrap;">[<i><a href="/wiki/Wikipedia:Please_clarify" title="Wikipedia:Please clarify"><span title="The text near this tag may need clarification or removal of jargon. (August 2016)">clarification needed</span></a></i>]</sup> The law applicable to the specific instrument will determine whether it is a negotiable instrument or a non-negotiable instrument. </p><p><a href="/wiki/Bank_notes" class="mw-redirect" title="Bank notes">Bank notes</a> are frequently referred to as promissory notes, a promissory note made by a bank and payable to bearer on demand. According to section 4 of India's <a href="/wiki/Negotiable_Instruments_Act,_1881" title="Negotiable Instruments Act, 1881">Negotiable Instruments Act, 1881</a>, "a Promissory Note is a writing (not being a bank note or currency note), containing an unconditional undertaking, signed by the maker to pay a certain sum of money only to or to the order of a certain person or the bearer of the instrument".<sup id="cite_ref-14" class="reference"><a href="#cite_note-14"><span class="cite-bracket">[</span>14<span class="cite-bracket">]</span></a></sup> </p> <div class="mw-heading mw-heading3"><h3 id="Bill_of_exchange">Bill of exchange</h3><span class="mw-editsection"><span class="mw-editsection-bracket">[</span><a href="/w/index.php?title=Negotiable_instrument&action=edit&section=8" title="Edit section: Bill of exchange"><span>edit</span></a><span class="mw-editsection-bracket">]</span></span></div> <p>A bill of exchange or "draft" is a written order by the <i><a href="https://en.wiktionary.org/wiki/drawer" class="extiw" title="wiktionary:drawer">drawer</a></i> to the <i><a href="https://en.wiktionary.org/wiki/drawee" class="extiw" title="wiktionary:drawee">drawee</a></i> to pay money to the <i><a href="https://en.wiktionary.org/wiki/payee" class="extiw" title="wiktionary:payee">payee</a></i>. A common type of bill of exchange is the <a href="/wiki/Cheque" title="Cheque">cheque</a> (<i>check</i> in <a href="/wiki/American_English" title="American English">American English</a>), defined as a bill of exchange drawn on a banker and payable on demand. Bills of exchange are used primarily in international trade, and are written orders by one person to his bank to pay the bearer a specific sum on a specific date. Prior to the advent of paper currency, bills of exchange were a common means of exchange. They are not used as often today. </p> <figure class="mw-halign-right" typeof="mw:File/Thumb"><a href="/wiki/File:Credit1.jpg" class="mw-file-description"><img src="//upload.wikimedia.org/wikipedia/commons/thumb/5/59/Credit1.jpg/260px-Credit1.jpg" decoding="async" width="260" height="113" class="mw-file-element" srcset="//upload.wikimedia.org/wikipedia/commons/thumb/5/59/Credit1.jpg/390px-Credit1.jpg 1.5x, //upload.wikimedia.org/wikipedia/commons/thumb/5/59/Credit1.jpg/520px-Credit1.jpg 2x" data-file-width="1744" data-file-height="760" /></a><figcaption>Belgian bill of exchange, 1933</figcaption></figure> <p>A bill of exchange is essentially an order made by one person to another to pay money to a third person. A bill of exchange requires in its inception three parties—the drawer, the drawee, and the payee. The person who draws the bill is called the drawer. He gives the order to pay money to the third party. The party upon whom the bill is drawn is called the drawee. He is the person to whom the bill is addressed and who is ordered to pay. He becomes an acceptor when he indicates his willingness to pay the bill. The party in whose favor the bill is drawn or is payable is called the payee. The parties need not all be distinct persons. Thus, the drawer may draw on himself payable to his own order. A bill of exchange may be endorsed by the payee in favour of a third party, who may in turn endorse it to a fourth, and so on indefinitely. The "holder in due course" may claim the amount of the bill against the drawee and all previous endorsers, regardless of any counterclaims that may have disabled the previous payee or endorser from doing so. This is what is meant by saying that a bill is negotiable. In some cases a bill is marked "not negotiable"—see <a href="/wiki/Crossing_of_cheques" title="Crossing of cheques">crossing of cheques</a>. In that case it can still be transferred to a third party, but the third party can have no better right than the transferor. </p> <div class="mw-heading mw-heading2"><h2 id="In_the_United_States">In the United States</h2><span class="mw-editsection"><span class="mw-editsection-bracket">[</span><a href="/w/index.php?title=Negotiable_instrument&action=edit&section=9" title="Edit section: In the United States"><span>edit</span></a><span class="mw-editsection-bracket">]</span></span></div> <p>In the <a href="/wiki/United_States" title="United States">United States</a>, Articles 3 and 4 of the <a href="/wiki/Uniform_Commercial_Code" title="Uniform Commercial Code">Uniform Commercial Code</a> (UCC) govern the issuance and transfer of negotiable instruments, unless the instruments are governed by Article 8 of the UCC. The various <a href="/wiki/Uniform_Commercial_Code_adoption" title="Uniform Commercial Code adoption">state law enactments</a> of UCC §§ 3–104(a) through (d) set forth the legal definition of what is and what is not a <i>negotiable instrument</i>: </p> <style data-mw-deduplicate="TemplateStyles:r1244412712">.mw-parser-output .templatequote{overflow:hidden;margin:1em 0;padding:0 32px}.mw-parser-output .templatequotecite{line-height:1.5em;text-align:left;margin-top:0}@media(min-width:500px){.mw-parser-output .templatequotecite{padding-left:1.6em}}</style><blockquote class="templatequote"><p><b>§ 3–104. NEGOTIABLE INSTRUMENT.</b> </p><p>(a) Except as provided in subsections (c) and (d), "negotiable instrument" means an unconditional promise or order to pay a fixed amount of money, with or without interest or other charges described in the promise or order, if it: (1) is payable to bearer or to order at the time it is issued or first comes into possession of a holder; (2) is payable on demand or at a definite time; and (3) does not state any other undertaking or instruction by the person promising or ordering payment to do any act in addition to the payment of money, but the promise or order may contain (i) an undertaking or power to give, maintain, or protect collateral to secure payment, (ii) an authorization or power to the holder to confess judgment or realize on or dispose of collateral, or (iii) a waiver of the benefit of any law intended for the advantage or protection of an obligor. (b) "Instrument" means a negotiable instrument. (c) An order that meets all of the requirements of subsection (a), except paragraph (1), and otherwise falls within the definition of "check" in subsection (f) is a negotiable instrument and a check. </p><p> (d) A promise or order other than a check is not an instrument if, at the time it is issued or first comes into possession of a holder, it contains a conspicuous statement, however expressed, to the effect that the promise or order is not negotiable or is not an instrument governed by this Article.</p></blockquote> <p>Thus, for a writing to be a negotiable instrument under Article 3,<sup id="cite_ref-15" class="reference"><a href="#cite_note-15"><span class="cite-bracket">[</span>15<span class="cite-bracket">]</span></a></sup> the following requirements must be met: </p> <ol><li>The promise or order to pay must be unconditional;</li> <li>The payment must be a specific sum of money, although <a href="/wiki/Interest_(finance)" class="mw-redirect" title="Interest (finance)">interest</a> may be added to the sum;</li> <li>The payment must be made on demand or at a definite time;</li> <li>The instrument must not require the person promising payment to perform any act other than paying the money specified;</li> <li>The instrument must be payable to bearer or to order.</li></ol> <p>The latter requirement is referred to as the "words of negotiability": a writing which does not contain the words "to the order of" (within the four corners of the instrument or in endorsement on the note or in <a href="/wiki/Allonge" title="Allonge">allonge</a>) or indicate that it is payable to the individual holding the contract document (analogous to the holder in due course) is not a negotiable instrument and is not governed by Article 3, even if it appears to have all of the other features of negotiability. The only exception is that if an instrument meets the definition of a cheque (a bill of exchange payable on demand and drawn on a <a href="/wiki/Bank" title="Bank">bank</a>) and is not payable to order (i.e. if it just reads "pay John Doe") then it is treated as a negotiable instrument. </p><p>UCC Article 3 does not apply to money, to payment orders governed by Article 4A, or to securities governed by Article 8.<sup id="cite_ref-16" class="reference"><a href="#cite_note-16"><span class="cite-bracket">[</span>16<span class="cite-bracket">]</span></a></sup> </p> <div class="mw-heading mw-heading3"><h3 id="Negotiation_and_endorsement">Negotiation and endorsement <span class="anchor" id="endorsement"></span></h3><span class="mw-editsection"><span class="mw-editsection-bracket">[</span><a href="/w/index.php?title=Negotiable_instrument&action=edit&section=10" title="Edit section: Negotiation and endorsement"><span>edit</span></a><span class="mw-editsection-bracket">]</span></span></div> <p>Persons other than the original obligor and obligee can become parties to a negotiable instrument. The most common manner in which this is done is by "endorsing" (from Latin <i>dorsum</i>, the back + <i>in</i><sup id="cite_ref-17" class="reference"><a href="#cite_note-17"><span class="cite-bracket">[</span>17<span class="cite-bracket">]</span></a></sup>), that is placing one's <a href="/wiki/Signature" title="Signature">signature</a> on the back of the instrument—if the person who signs does so with the intention of obtaining payment of the instrument or acquiring or transferring rights to the instrument, the signature is called an <i>endorsement</i>. There are five types of endorsements contemplated by the Code, covered in UCC <a rel="nofollow" class="external text" href="https://www.law.cornell.edu/ucc/3/article3.htm#s3-204">Article 3, Sections 204–206</a>: </p> <ul><li>An endorsement which purports to transfer the instrument to a specified person is a <i>special endorsement</i> – for example, "Pay to the order of Amy";</li> <li>An endorsement by the payee or holder which does not contain any additional notation (thus purporting to make the instrument payable to bearer) is an <i>endorsement in blank</i> or <i><a href="/wiki/Blank_endorsement" title="Blank endorsement">blank endorsement</a>;</i></li> <li>An endorsement which purports to require that the funds be applied in a certain manner (e.g. "<style data-mw-deduplicate="TemplateStyles:r1238216509">.mw-parser-output .vanchor>:target~.vanchor-text{background-color:#b1d2ff}@media screen{html.skin-theme-clientpref-night .mw-parser-output .vanchor>:target~.vanchor-text{background-color:#0f4dc9}}@media screen and (prefers-color-scheme:dark){html.skin-theme-clientpref-os .mw-parser-output .vanchor>:target~.vanchor-text{background-color:#0f4dc9}}</style><span class="vanchor"><span id="for_deposit_only"></span><span class="vanchor-text">for deposit only</span></span>", "for collection") is a <i>restrictive endorsement</i>; and,</li> <li>An endorsement purporting to disclaim retroactive liability is called a <i>qualified endorsement</i> (through the inscription of the words "without recourse" as part of the endorsement on the instrument or in <a href="/wiki/Allonge" title="Allonge">allonge</a> to the instrument).</li> <li>An endorsement purporting to add terms and conditions is called a <i>conditional endorsement</i> – for example, "Pay to the order of Amy, if she rakes my lawn next Thursday November 15th, 2007". The UCC states that these conditions may be disregarded.<sup id="cite_ref-18" class="reference"><a href="#cite_note-18"><span class="cite-bracket">[</span>18<span class="cite-bracket">]</span></a></sup></li></ul> <p>If a note or draft is negotiated to a person who acquires the instrument </p> <ol><li>in <a href="/wiki/Good_faith" title="Good faith">good faith</a>;</li> <li>for <a href="/wiki/Value_(economics)" title="Value (economics)">value</a>;</li> <li>without notice of any <a href="/wiki/Defense_(legal)" title="Defense (legal)">defenses</a> to payment,</li></ol> <p>the transferee is a <i><a href="/wiki/Holder_in_due_course" title="Holder in due course">holder in due course</a></i> and can enforce the instrument <i>without</i> being subject to defenses which the maker of the instrument would be able to assert against the original payee, except for certain <i>real defenses</i>. These real defenses include (1) forgery of the instrument; (2) fraud as to the nature of the instrument being signed; (3) alteration of the instrument; (4) incapacity of the signer to contract; (5) infancy of the signer; (6) duress; (7) discharge in bankruptcy; and, (8) the running of a statute of limitations as to the validity of the instrument. The <i>holder-in-due-course rule</i> is a <i>rebuttable presumption</i> that makes the free transfer of negotiable instruments feasible in the modern economy. A person or entity purchasing an instrument in the ordinary course of business can reasonably expect that it will be paid when presented to, and not subject to dishonor by, the maker, without involving itself in a dispute between the maker and the person to whom the instrument was first issued (this can be contrasted to the lesser rights and obligations accruing to mere holders). Article 3 of the Uniform Commercial Code as enacted in a particular State's law contemplate <i>real defenses</i> available to purported holders in due course. The foregoing is the theory and application presuming compliance with the relevant law. Practically, the obligor-payor on an instrument who feels he has been defrauded or otherwise unfairly dealt with by the payee may nonetheless refuse to pay even a holder in due course, requiring the latter to resort to <a href="/wiki/Lawsuit" title="Lawsuit">litigation</a> to recover on the instrument. </p> <div class="mw-heading mw-heading3"><h3 id="Usage">Usage</h3><span class="mw-editsection"><span class="mw-editsection-bracket">[</span><a href="/w/index.php?title=Negotiable_instrument&action=edit&section=11" title="Edit section: Usage"><span>edit</span></a><span class="mw-editsection-bracket">]</span></span></div> <p>While bearer instruments are rarely created as such, a holder of <a href="/wiki/Commercial_paper" title="Commercial paper">commercial paper</a> with the holder designated as payee can change the instrument to a bearer instrument by an endorsement. The proper holder simply signs the back of the instrument and the instrument becomes bearer paper, although in recent years, third party checks are not being honored by most banks unless the original payee has signed a notarized document stating such. </p><p>Alternatively, an individual or company may write a <a href="/wiki/Cheque" title="Cheque">check</a> payable to "cash" or "bearer" and create a bearer instrument. Great care should be taken with the security of the instrument, as it is legally almost as good as cash. </p> <div class="mw-heading mw-heading3"><h3 id="Exceptions">Exceptions</h3><span class="mw-editsection"><span class="mw-editsection-bracket">[</span><a href="/w/index.php?title=Negotiable_instrument&action=edit&section=12" title="Edit section: Exceptions"><span>edit</span></a><span class="mw-editsection-bracket">]</span></span></div> <p>Under the Code, the following are not negotiable instruments, although the law governing obligations with respect to such items may be similar to or derived from the law applicable to negotiable instruments: </p> <ul><li><a href="/wiki/Bill_of_lading" title="Bill of lading">Bills of lading</a> and other documents of title, which are governed by Article 7 of the Code. However, under <a href="/wiki/Admiralty_law" title="Admiralty law">admiralty law</a>, a bill of lading may either be a negotiable or 'order' bill of lading, or a non-negotiable or 'straight' bill of lading.</li> <li><a href="/wiki/Deed" title="Deed">Deeds</a> and other documents conveying interests in real estate, although a <a href="/wiki/Mortgage_law" title="Mortgage law">mortgage</a> may secure a promissory note which is governed by Article 3</li> <li><a href="/wiki/IOU_(debt)" class="mw-redirect" title="IOU (debt)">IOUs</a></li> <li><a href="/wiki/Letters_of_credit" class="mw-redirect" title="Letters of credit">Letters of credit</a>, which are governed by Article 5 of the Code</li></ul> <div class="mw-heading mw-heading2"><h2 id="Modern_relevance">Modern relevance</h2><span class="mw-editsection"><span class="mw-editsection-bracket">[</span><a href="/w/index.php?title=Negotiable_instrument&action=edit&section=13" title="Edit section: Modern relevance"><span>edit</span></a><span class="mw-editsection-bracket">]</span></span></div> <p>Although often considered foundational in business law, the modern relevance of negotiability has been questioned.<sup id="cite_ref-Mann_19-0" class="reference"><a href="#cite_note-Mann-19"><span class="cite-bracket">[</span>19<span class="cite-bracket">]</span></a></sup> Negotiability can be traced back to the 1700s and <a href="/wiki/William_Murray,_1st_Earl_of_Mansfield" title="William Murray, 1st Earl of Mansfield">Lord Mansfield</a>, when <a href="/wiki/Money" title="Money">money</a> and <a href="/wiki/Market_liquidity" title="Market liquidity">liquidity</a> was relatively scarce.<sup id="cite_ref-Greenlee_11-1" class="reference"><a href="#cite_note-Greenlee-11"><span class="cite-bracket">[</span>11<span class="cite-bracket">]</span></a></sup> The holder in due course rule has been limited by various statutes.<sup id="cite_ref-Greenlee_11-2" class="reference"><a href="#cite_note-Greenlee-11"><span class="cite-bracket">[</span>11<span class="cite-bracket">]</span></a></sup> Concerns have also been raised that the holder in due course rule does not align the incentives of the mortgage originators and the assignees efficiently.<sup id="cite_ref-Greenlee_11-3" class="reference"><a href="#cite_note-Greenlee-11"><span class="cite-bracket">[</span>11<span class="cite-bracket">]</span></a></sup> </p> <div class="mw-heading mw-heading2"><h2 id="See_also">See also</h2><span class="mw-editsection"><span class="mw-editsection-bracket">[</span><a href="/w/index.php?title=Negotiable_instrument&action=edit&section=14" title="Edit section: See also"><span>edit</span></a><span class="mw-editsection-bracket">]</span></span></div> <ul><li><a href="/wiki/Bearer_instrument" title="Bearer instrument">Bearer instrument</a></li> <li><a href="/wiki/Hundi" title="Hundi">Hundi</a></li> <li><a href="/wiki/Negotiable_cow" class="mw-redirect" title="Negotiable cow">Negotiable cow</a></li></ul> <div class="mw-heading mw-heading2"><h2 id="References">References</h2><span class="mw-editsection"><span class="mw-editsection-bracket">[</span><a href="/w/index.php?title=Negotiable_instrument&action=edit&section=15" title="Edit section: References"><span>edit</span></a><span class="mw-editsection-bracket">]</span></span></div> <style data-mw-deduplicate="TemplateStyles:r1239543626">.mw-parser-output .reflist{margin-bottom:0.5em;list-style-type:decimal}@media screen{.mw-parser-output .reflist{font-size:90%}}.mw-parser-output .reflist .references{font-size:100%;margin-bottom:0;list-style-type:inherit}.mw-parser-output .reflist-columns-2{column-width:30em}.mw-parser-output .reflist-columns-3{column-width:25em}.mw-parser-output .reflist-columns{margin-top:0.3em}.mw-parser-output .reflist-columns ol{margin-top:0}.mw-parser-output .reflist-columns li{page-break-inside:avoid;break-inside:avoid-column}.mw-parser-output .reflist-upper-alpha{list-style-type:upper-alpha}.mw-parser-output .reflist-upper-roman{list-style-type:upper-roman}.mw-parser-output .reflist-lower-alpha{list-style-type:lower-alpha}.mw-parser-output .reflist-lower-greek{list-style-type:lower-greek}.mw-parser-output .reflist-lower-roman{list-style-type:lower-roman}</style><div class="reflist"> <div class="mw-references-wrap mw-references-columns"><ol class="references"> <li id="cite_note-1"><span class="mw-cite-backlink"><b><a href="#cite_ref-1">^</a></b></span> <span class="reference-text"><style data-mw-deduplicate="TemplateStyles:r1238218222">.mw-parser-output cite.citation{font-style:inherit;word-wrap:break-word}.mw-parser-output .citation q{quotes:"\"""\"""'""'"}.mw-parser-output .citation:target{background-color:rgba(0,127,255,0.133)}.mw-parser-output .id-lock-free.id-lock-free a{background:url("//upload.wikimedia.org/wikipedia/commons/6/65/Lock-green.svg")right 0.1em center/9px no-repeat}.mw-parser-output .id-lock-limited.id-lock-limited a,.mw-parser-output .id-lock-registration.id-lock-registration a{background:url("//upload.wikimedia.org/wikipedia/commons/d/d6/Lock-gray-alt-2.svg")right 0.1em center/9px no-repeat}.mw-parser-output .id-lock-subscription.id-lock-subscription a{background:url("//upload.wikimedia.org/wikipedia/commons/a/aa/Lock-red-alt-2.svg")right 0.1em center/9px no-repeat}.mw-parser-output .cs1-ws-icon a{background:url("//upload.wikimedia.org/wikipedia/commons/4/4c/Wikisource-logo.svg")right 0.1em center/12px no-repeat}body:not(.skin-timeless):not(.skin-minerva) .mw-parser-output .id-lock-free a,body:not(.skin-timeless):not(.skin-minerva) .mw-parser-output .id-lock-limited a,body:not(.skin-timeless):not(.skin-minerva) .mw-parser-output .id-lock-registration a,body:not(.skin-timeless):not(.skin-minerva) .mw-parser-output .id-lock-subscription a,body:not(.skin-timeless):not(.skin-minerva) .mw-parser-output .cs1-ws-icon a{background-size:contain;padding:0 1em 0 0}.mw-parser-output .cs1-code{color:inherit;background:inherit;border:none;padding:inherit}.mw-parser-output .cs1-hidden-error{display:none;color:var(--color-error,#d33)}.mw-parser-output .cs1-visible-error{color:var(--color-error,#d33)}.mw-parser-output .cs1-maint{display:none;color:#085;margin-left:0.3em}.mw-parser-output .cs1-kern-left{padding-left:0.2em}.mw-parser-output .cs1-kern-right{padding-right:0.2em}.mw-parser-output .citation .mw-selflink{font-weight:inherit}@media screen{.mw-parser-output .cs1-format{font-size:95%}html.skin-theme-clientpref-night .mw-parser-output .cs1-maint{color:#18911f}}@media screen and (prefers-color-scheme:dark){html.skin-theme-clientpref-os .mw-parser-output .cs1-maint{color:#18911f}}</style><cite id="CITEREFRogers" class="citation book cs1">Rogers, James Steven. <i>The Early History of the Law of Bills and Notes: A Study of the Origins of Anglo-American Commercial Law</i>. Cambridge University Press. p. 3.</cite><span title="ctx_ver=Z39.88-2004&rft_val_fmt=info%3Aofi%2Ffmt%3Akev%3Amtx%3Abook&rft.genre=book&rft.btitle=The+Early+History+of+the+Law+of+Bills+and+Notes%3A+A+Study+of+the+Origins+of+Anglo-American+Commercial+Law&rft.pages=3&rft.pub=Cambridge+University+Press&rft.aulast=Rogers&rft.aufirst=James+Steven&rfr_id=info%3Asid%2Fen.wikipedia.org%3ANegotiable+instrument" class="Z3988"></span></span> </li> <li id="cite_note-2"><span class="mw-cite-backlink"><b><a href="#cite_ref-2">^</a></b></span> <span class="reference-text"><i><a rel="nofollow" class="external text" href="https://www.austlii.edu.au/au/legis/cth/consol_act/boea1909148/">Bills of Exchange Act 1909</a></i> (Cth)</span> </li> <li id="cite_note-Durant-3"><span class="mw-cite-backlink"><b><a href="#cite_ref-Durant_3-0">^</a></b></span> <span class="reference-text"><link rel="mw-deduplicated-inline-style" href="mw-data:TemplateStyles:r1238218222"><cite id="CITEREFDurant1944" class="citation book cs1">Durant, Will (1944). <i>Caesar and Christ: a history of Roman civilization and of Christianity from their beginnings to A.D. 325</i>. The story of civilization. Vol. 3. 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Retrieved <span class="nowrap">2014-06-23</span></span>.</cite><span title="ctx_ver=Z39.88-2004&rft_val_fmt=info%3Aofi%2Ffmt%3Akev%3Amtx%3Abook&rft.genre=unknown&rft.btitle=Article+3%2C+Sections+206%28b%29&rft.pub=Law.cornell.edu&rft_id=https%3A%2F%2Fwww.law.cornell.edu%2Fucc%2F3%2Farticle3.htm%23s3-206&rfr_id=info%3Asid%2Fen.wikipedia.org%3ANegotiable+instrument" class="Z3988"></span></span> </li> <li id="cite_note-Mann-19"><span class="mw-cite-backlink"><b><a href="#cite_ref-Mann_19-0">^</a></b></span> <span class="reference-text">Mann RJ (1996). <a rel="nofollow" class="external text" href="http://www.columbia.edu/~mr2651/Data/SearchforNegotiability.pdf">Searching for Negotiability in Payment and Credit Systems</a>. <i>UCLA Law Review</i>.</span> </li> </ol></div></div> <div class="mw-heading mw-heading2"><h2 id="External_links">External links</h2><span class="mw-editsection"><span class="mw-editsection-bracket">[</span><a 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