Valuable Documents
What is a Negotiable Instrument?
Definition of Negotiable Instrument: A negotiable instrument is a document to which the right stated therein is strictly attached, meaning that the right can only be claimed and transferred by means of this document. Negotiable instruments are held by the creditor or the holder of the right. They represent the debtor’s promise and the creditor’s right. They differ significantly from ordinary promissory notes representing a claim. To understand these differences, it is particularly important to know the characteristics of negotiable instruments.
Characteristics of Negotiable Instruments:
– The right must be transferable to another party.
– The right must be capable of being evaluated in cash.
– There is a close link between the right and the instrument. The right cannot be asserted or transferred without the instrument.
– The principle of abstraction applies. The underlying debt relationship that gave rise to the instrument cannot be understood from the negotiable instrument itself.
– The types of negotiable instruments are specified in the law in a limited number.
– Negotiable instruments are subject to strict formal requirements.
Forms of Transfer of Negotiable Instruments:
Bearer Instrument: An instrument bearing the name of the first creditor and not containing an endorsement to order (which gives the right to transfer not only the instrument and therefore the abstract claim written on it, but also the underlying claim that gave rise to the instrument). Their transfer and the consequences of such transfer are subject to the rules governing the assignment of claims.
Order Negotiable Instruments: These are instruments bearing the name of the original creditor and additionally containing an endorsement to his order (or in some cases, this endorsement is deemed to exist). This endorsement is deemed to exist in promissory notes, bills of exchange, and checks. Therefore, unless they are in another form (registered or bearer), they are legally considered order negotiable instruments. Bearer instruments can be transferred by endorsement and delivery.
Bearer Instruments: These are instruments where the bearer (the person carrying, possessing, or holding the instrument) is considered the rightful owner. Therefore, there is no specific form required for transfer in this type of instrument. It is sufficient for the bearer to deliver the instrument to the person to whom they wish to transfer the claim. Bills of exchange and promissory notes are not made payable to bearer, but checks can be made payable to bearer.
Types of Negotiable Instruments:
4.1. Negotiable Instruments: Negotiable instruments are negotiable documents containing a monetary claim. The debtor of a negotiable instrument undertakes to pay the amount stated on the instrument to the bearer. Bonds, bills of exchange, and checks are considered negotiable instruments. Negotiable instruments have certain characteristics.
The characteristics of negotiable instruments are as follows:
– They contain a right to claim.
– They have an international nature.
– They establish a debt relationship.
– The principle of independence of signatures and declarations applies.
– Presentation of the bill is required for payment.
– They must comply with the necessary formal requirements.
– They are negotiable instruments.
– Those who sign the bill are jointly and severally liable, even if they sign as guarantors.