The first mention of the use of bills of exchange in English statutes dates from 1381, under Richard II the statute mandates the use of such instruments in England, and prohibits the future export of gold and silver specie, in any form, to settle foreign commercial transactions. In Italy in the 13–15th centuries, bills of exchange and promissory notes obtained their main features, while further phases of their development have been associated with France (16–18th centuries, where the endorsement had appeared) and Germany (19th century, formalization of Exchange Law). Such prototypes came to be used later by the Iberian and Italian merchants in the 12th century. Later, such documents were used for money transfer by Middle Eastern merchants, who had used the prototypes of bills of exchange (" suftadja" or " softa") from the 8th century to present. The collapse was caused by the court accepting the "cha" only at progressive discount. In the mid-13th century, the Ilkhanid rulers of Persia printed the "cha" or "chap" which was used as paper money for limited use for transactions between the court and the merchants for about three years before it collapsed. In about 1150 the Knights Templar issued an early form of bank notes to departing pilgrims in exchange for a deposit of valuables at a local Templar preceptory in a European country, which could be cashed by the pilgrim concerned on arrival in the Holy land, by presenting the note to a Templar preceptory there.
Ĭommon prototypes of bills of exchanges and promissory notes originated in China, where special instruments called fey tsien which were used to safely transfer money over long distances during the reign of the Tang Dynasty in the 8th century. The ancient Romans are believed to have used an early form of cheque known as praescriptiones in the 1st century BCE and 2,000-year-old Roman promissory notes have been found. In India, during the Mauryan period in the 3rd century BCE, an instrument called adesha was in use, which was an order on a banker desiring him to pay the money of the note to a third person, which corresponds to the definition of a bill of exchange as we understand it today. Bills of Exchange Act 1882 in the UK, Bills of Exchange Act 1890 in Canada, Bills of Exchange Act 1908 in New Zealand, Bills of Exchange Act 1909 in Australia, the Negotiable Instruments Act, 1881 in India and the Bills of Exchange Act 1914 in Mauritius.Īdditionally most Commonwealth jurisdictions have separate Cheques Acts providing for additional protections for bankers collecting unendorsed or irregularly endorsed cheques, providing that cheques that are crossed and marked 'not negotiable' or similar are not transferable, and providing for electronic presentation of cheques in inter-bank cheque clearing systems. In the Commonwealth of Nations almost all jurisdictions have codified the law relating to negotiable instruments in a Bills of Exchange Act, e.g. The transferee acquires a good title, even though the transferor had a defective or no title.Negotiable instruments are transferable under the following circumstances: they are transferable by delivery where they are made payable to the bearer, they are transferable by delivery and endorsement where they are made payable to order.William Searle Holdsworth defines the concept of negotiability as follows: The term has different meanings depending on the use of the term as it is used in the application of different laws, and depending in which country and context it is used. More specifically, it is a document contemplated by or consisting of a contract, which promises the payment of money without condition, which may be paid either on demand or at a future date. A negotiable instrument is a document guaranteeing the payment of a specific amount of money, either on demand, or at a set time, whose payer is usually named on the document.
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