Tuesday, August 25, 2020

Requirements for Negotiability: Written Form

 Requirements for Negotiability: Written Form

Negotiable instruments must be in written form. Clearly, an oral order or promise can create the danger of fraud or make it difficult to determine liability. Negotiable instruments must possess the quality of certainty only formal, written expression can give. The mode of writing can be handwritten, typed or printed.

We don’t find any explicit requirement of writing in the commercial code provisions. However articles 735, 823 and 827 impliedly require the instrument be in writing. All these articles begin by the phrase “…..shall contain” and then enumerates the specific requirements. these specific requirements statements to be written by the drawer or maker. Hence the code makes it apparent that an oral order or promise could not be considered as a commercial instrument. Additionally article 715 defines a negotiable instrument as “any document”, making it clear that only a written instrument may qualify as negotiable.

There are practical limitations concerning the writing and the substance on which it is placed. The writing must be on material that lends itself to permanence. Instruments carved in blocks of ice or recorded on other impermanent surfaces would not qualify as negotiable instruments.

The writing must also be portable. If an instrument is not portable, it cannot meet the requirement that it be freely transferable. For example, Abera writes on the side of a dog “I Abera promise to pay Almaz or order 1,000 birr on demand.” Technically this meets the requirements of a negotiable instrument, but as a dog cannot be easily transferred in the ordinary course of business, the instrument is non-negotiable.

Permanence and portability are not spelled-out legal requirements under the commercial code.  If disputes related to permanent and portability are bought before our courts the judge has to construct whether a given instrument is negotiable or non negotiable, guided by the undraping role and function of instruments in facilitating business transaction. Avoiding risk of loss and making business easy and simple, that is the overall relevance of instruments. Moreover, the judge should also take into account the intention of the parties, custom of business in the area and other relevant circumstances attached to the case and rules of interpretation which could help him reach at correct and fair conclusion.

When we think of a cheque, we normally envision a preprinted form with the “normal” terms and phrases on it , including  the bank’s name and address, “pay to the order of,” and so on. The commercial says nothing to indicate that negotiable instrument muse be typed or printed or placed on any specific of material, a part from the fact that it impliedly requires that it be in writing.

It is also silent as to whether the writing must lend it set to germane, and the writing must be portable.

Do you regard the following cheques as valid or negotiable provided the written content fulfills all the requirements of Art 827?

cheques written on

naplans

menus

tablecloths

shirfs

an egg shell

a water melon

on your registration slip/grade report

on a greeting card

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