From: "Perry E. Metzger" <perry@imsi.com>
Date: Sat, 19 Nov 94 09:29:11 PST
To: cypherpunks@toad.com
Subject: Re: Islands in the Net
In-Reply-To: <199411190624.WAA01721@largo.admate.com>
Message-ID: <9411191729.AA14159@snark.imsi.com>
MIME-Version: 1.0
Content-Type: text/plain



Eric Hughes says:
> Negotiable means something else entirely.  A negotiable instrument is
> an instrument that can be transferred with certain protections over
> and above the transfer of a normal contractual obligations.  The
> requisites for negotiability are, basically, those that make the
> instrument suitable for sale in a secondary market.  The instrument
> must be in writing (not oral).  It must be signed.  It must contain an
> unconditional promise or an order for a particular sum of money and
> must contain to other promises, orders, etc.  It must be payable to
> order or to bearer.  The exact details may be found in your standard
> commercial paper review guide.

It must be for a sum certain in money, payable on a date certain. It
must state the place and person (note -- not necessarily a natural
person) to whom the money must be delivered.

Typical notes contain other conditions, but those are the keys.

Checks, promisary notes, bank notes (which most of us have never seen
in our lifetimes) and many other similar instruments are all
considered "commercial paper" and are similar in form.

(Checks are interesting in so far as they are an order to the bank to
pay at its premises to the named party, whereas many notes state that
the signatory must pay to the holder at his premises on a particular
time and place. However, such subtleties aren't particularly important
for our purposes.)

The fascinating thing about the rules for commercial paper, by the
way, is that they come from the Law Merchant, which was developed at
medieval trade fairs in merchant courts that had no connection with
any government entity and no overt powers of enforcement...

Perry