In the eighteenth century, any merchant would regularly have to take bills or notes as a form of payment. Then, in order to pass on the instruments, the merchant would have to indorse them. An indorser might have to pay the instrument months later as a result of the failure of some other merchant. Much of negotiable instruments law comes from the understandable desperation of people facing the prospect of financial ruin when called on to pay bills that passed through their hands long ago. While these commercial practices died out long ago, the law of negotiable instruments has inexplicably endured. In part, that is a result of confusion about the practice of discounting commercial paper. In part, it is a result of lawyers’ fascination with the idea that commercial law derives from the “law merchant.”
Keywords: negotiable instrument; check; promissory note; law merchant; bill of exchange; indorsement; bank note; discounting; commercial paper
Chapter. 8697 words. Illustrated.
Subjects: Company and Commercial Law
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