Talk:Negotiable instrument

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Article rewrite[edit]

Just read the first sentence of this article. It clearly needs to be rewritten. Natisto (talk) 14:38, 13 September 2010 (UTC)

Agreed. Very unclear -- is the first para just about negotiable instruments in India? Anyone with even a little knowledge of this (not me) could likely improve this article greatly in a minute or two. (talk) 03:29, 24 January 2012 (UTC)
At some point in this proposed re-write, I would suggest that we switch from the colloquial "endorsement" to the more precise "indorsement." The "i" vs "e" spelling difference is reflected in the UCC and nearly all legal documents, and the use of the "e"-endorsement spelling is seen as a symbol to bar examiners that you don't really know what you're talking about. I'm willing to go through and change it but I'm not going to do it if someone is just going to come in and muck it up after I'm done. — Preceding unsigned comment added by (talk) 14:22, 17 June 2013 (UTC)

I see scant evidence that "endorsement" is the colloquial form. See the entry in Wiktionary, which defines "indorsement" as "1. Alternative spelling of endorsement.", suggesting (to me, anyway) that the "i"- word is the colloquial form.Terry Thorgaard (talk) 17:44, 10 July 2014 (UTC) Etymology of "indorse" recites " ... that the alternative form endorse is now more common ..." ```` — Preceding unsigned comment added by Terry Thorgaard (talkcontribs) 17:48, 10 July 2014 (UTC)

Bill of exchange[edit]

The following needs to be integrated into the article, as I now have the bill of exchange article redirected.

Originally, the bill of exchange had four parties: the purchaser would go to his banker and ask him to draw up an order to pay a sum of money at a certain time at a certain place. The banker would adjust the purchaser's account accordingly, then draw up the bill. The purchaser would then take the bill to the payee and exchange it for whatever goods or services he wanted to buy. The payee then took the bill to his banker and redeemed it for the face value. The validity of the bill depended on the drawer (banker #1) having sufficient credit with the drawee (banker #2). As banking grew more sophisticated and institutionalized, the necessity for the drawer to be a banker disappeared and the number of parties on the bill was reduced to three: drawer, drawee and payee. A draft is a bill of exchange payable on demand of the payee. -- Ellsworth
"A draft is a bill of exchange payable on demand of the payee." That is actually not true under the Uniform Commercial Code's Article 3, which has been adopted in all 50 U.S. states. [Yes, I know there are alterations to the pure Code when legislatures get their greasy mitts on it. I do not think for my present purposes any U.S. legislature has mucked up my underlying point.] A draft is simply defined as follows: "An a 'draft' if it is an order." An "order" here means "a written instruction to pay money signed by the person giving the instruction." A draft may be either payable on demand or at a definite time. In other words, a draft in the U.S. is identical to a bill of exchange in the U.K. [Or at least I cannot find a difference.] Indeed, having been through law school and studied negotiable instruments in the U.S., I can honestly say I never heard the term "bill of exchange" before today.
So I suppose what I'm getting at is this article needs to be amended to recognize the differences in terminology between the U.S. and the U.K. "Cheque" and "check" are similar enough terms so that I suspect no one is terribly confused. "Bill of exchange" and "draft," on the other hand, are different enough terms that I suspect some clarification would be welcome. --YLlama 23:11, 16 November 2006 (UTC)
I think the concern has been addressed. You are right about the definition of a draft under UCC Art. 3; the 1996 revision of the Article eliminates the term "bill of exchange" entirely. The definition of a draft as a demand bill of exchange is historical. Ellsworth (talk) 03:45, 28 March 2014 (UTC)

Other countries[edit]

India - In India currency note is not negotiable instrument as In india Reserve bank of india has only right to issue a negotiable instrument that is payable to the bearer itself

We need details of the rules in other countries. How similar/different are they to the US ? -- Beardo 11:37, 26 May 2006 (UTC)

More Bills of Exchange[edit]

I think that perhaps a specific article on Bill of Exchange is needed. The Bill of Exchange is an important commercial document in UK and by having an article, links to rules and other commercial codes in other countries might be made.. and then new articles created. Maybe the article on bill of exchange should not be redirected. --kimMart 19 Oct 2006

Re: Ellsworth's definition above:
This definition below is from
A non-interest-bearing written order used primarily in international trade that binds one party to pay a fixed sum of money to another party at a predetermined future date.
Bills of exchange are similar to checks and promissory notes. They can be drawn by individuals or banks and are generally transferable by endorsements. The difference between a promissory note and a bill of exchange is that this product is transferable and can bind one party to pay a third party that was not involved in its creation. If these bills are issued by a bank, they can be referred to as bank drafts. If they are issued by individuals, they can be referred to as trade drafts.
Another site that is useful for research purposes is
because this has mention of the Geneva Convention and The United Kingdom Bills of Exchange Act 1882 which are important legislation.
Reading this and other literature, you see the Bill of Exchange should be given a separate article.


The article was a victim of vandalism and reckless editing in the last 3 months. I have tried to restore it as much as I can. – Kaihsu (talk) 14:08, 15 September 2008 (UTC)

A negotiable instrument is not itself a contract[edit]

but it is the result of a contract and is often the res by which performance of a contract is undertaken. It is the intent to conclude and perform a contract that gives rise to the making and execution of a negotiable instrument. The duly-made and duly-executed instrument has a special legal identity under the applicable State’s enactment of Article 3 of the Uniform Commercial Code; and, the instrument, on demand according to its terms, or when negotiated, warrants the payment of money or other conveyance of value. Lawyers often refer to the 'underlying contract', which is, itself, often evidenced by a separate writing, such as in the instance of a real-property mortgage, the evidentiary documentation of which consists of a promissory note warranting payment, and the mortgage contract document—which memorializes a contract, a legal construct consisting of mutual assent and bargained-for consideration (a benefit or detriment accruing to the parties to the contract) evidencing, contemplating and requiring performance, and conveying a security interest in real property as security securing repayment, "on the note". When the note is negotiated, the mortgage obligation follows by operation of law as a mortgage in equity (although often an explicit assignment document is executed and recorded for public notice) and is not to be confused with the remedy called an equitable mortgage.

The essence of what the article tries to communicate about the legal identity of a negotiable instrument is correct; I've cleaned it up to make it strictly accurate as statements of law strictly relevant and pertinent to the subject matter of the article (the distinction between the legal identity of a negotiable instrument and the underlying contract was not clear). (talk) 20:16, 11 September 2010 (UTC)