NEGOTIABLE INTRUMENTS LAW (REVIEWER)

INTRODUCTION
ORIGIN

Agbayani: The Negotiable Instrument Law is a creature of the law merchant, from which it was imported into England
and crystallized in the English common law. It was codified in that country in 1882 by what is known as the Bills of
Exchange Act.
In the United States there was, prior to the drafting of the Negotiable Instrument Law, a codification of the law in some
states but there was nothing looking towards a codification for all the states of the Union. The earliest codification for an
individual state is found in the California Code of 1372.

At a conference of commissioners from nineteen states held in 1895, a resolution was adopted requesting the committee
on commercial laws to procure a draft bill relating to commercial paper based on the Bill of Exchange Act. In 1896, the
draft, as amended, was adopted by the conference and recommended for general enactment by the state Legislatures.
Campos: The use of negotiable instruments originated from the merchants and traders of the Middle Ages, more
specifically among the Florentine and Venetian merchants along the Adriatic Sea. The bill of exchange was devised to
facilitate the contract of cambium and to avoid the risks of transporting money.
Sebastian: The Negotiable Instrument Law is a compilation of commercial practice developed in Europe. It was
necessary for traders to come up with a substitute medium of exchange because trade was flourishing. There was hardly
enough government coins to sustain the production of mint. In those days, bank notes (or paper bills) were non-existent.
Due to scarcity of coins, promissory notes and bills of exchange came about.
This compilation of rules have evolved from ancient trading practices. In 1882, UK enacted the Bill of Exchange Act. On
or about that time, the US also codified a verbatim reproduction of the Uniform Negotiable Instrument Law.
The Americans brought the Negotiable Instrument Law to the Philippines which we copied verbatim. It has not been
amended since 1911.
PURPOSE
Agbayani:

1.) To produce uniformity in the laws of the different states upon this important subject, so that the citizens of each
state might know the rules which would be applied on their notes, checks and other negotiable paper in every
other state in which the law was enacted, since it was impossible for the commercial purchaser in any state to
know all the details affecting the negotiability of paper governed by the laws of all the other states.