Negotiable Instruments Law
Function and importance of negotiable instruments
Although they do not constitute legal tender, they are used as a substitute formoney.
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 theyhave been encashed or when through the fault of the creditor they have beenimpaired. [Article 1249, Civil Code]
Characteristics of negotiable instruments
Negotiability: That quality or attribute whereby a bill, note or check passes ormay pass from hand to hand, similar to money, so as to give the holder indue course the right to hold the instrument and collect the sum payable forhimself 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 exchange2.Promissory note3.Check
Bill of exchange
A bill of exchange is an unconditional order in writing addressed by oneperson to another, signed by the person giving it, requiring the person to