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 t o 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 InstrumentsNon-negotiable InstrumentsContains 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 InstrumentsNegotiable Documents of TitleHave 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 anther, signed by the maker, engaging to pay on demand or a fixed determinable future time a sum certain in money to order or bearer. When the note is drawn to maker’sown order, it is not complete u ntil indorse by him. (Sec. 184 NIL) Parties: 1.maker 2.payee 6. Bill of Exchange–unconditional order in writing addressed by one person to another, signed by the person giving it, requiring the person to whom it is addressed to pay on demand or at a fixed or determinable future time a sum certain in money to order or to bearer. (Sec. 126 NIL) Parties: 1.drawer 2.payee 3.drawee/ acceptor