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Negotiable Instrument

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1. Negotiable Instruments – written contracts for the payment of money; by its form, intended as a substitute for money and intended to pass from hand to hand, to give the holder in due course the right to hold the same and collect the sum due.
2. Characteristics of Negotiable Instruments:
a. negotiability – right of transferee to hold the instrument and collect the sum due
b. accumulation of secondary contracts – instrument is negotiated from person to person
3. Difference between Negotiable Instruments from Non-Negotiable Instruments: Negotiable Instruments | Non-negotiable Instruments | Contains all the requisites of Sec. 1 of the NIL | does not contain all the requisites of Sec. 1 of the NIL | Transferred by negotiation | transferred by assignment | Holder in due course may have better rights than transferor | transferee acquires rights only of his transferor | Prior parties warrant payment | prior parties merely warrant legality of title | Transferee has right of recourse against intermediate parties | transferee has no right of recourse |
4. Difference between Negotiable Instruments and Negotiable Documents of Title Negotiable Instruments | Negotiable Documents of Title | Have requisites of Sec. 1 of the NIL | does not contain requisites of Sec. 1 of NIL | Have right of recourse against intermediate parties who are secondarily liable | no secondary liability of intermediate parties | Holder in due course may have rights better than transferor | transferee merely steps into the shoes of the transferor | Subject is money | subject is goods | Instrument itself is property of value | instrument is merely evidence of title; thing of value are the goods mentioned in the document |
5. Promissory Note – unconditional promise to pay in writing made by one person to another, signed by the maker,...

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