A Study On The System Of Restriction On Defenses Of Negotiable Instruments

It's required that necessary restraints are put to the acts of negotiable instrument for potential ground of pleading to insure transaction safely or to promote negotiable instrument circulation. However, ground of pleading is limited, at the same time, by the equitable value. The rule of restraint on the defense of negotiable instrument is , in fact, a result from the mutual conflict and compromise between transaction safety and real equity. This paper, taking as its starting-point the function of negotiable instrument, provides a meticulous study on the rule, and is divided into two parts: Part one: significance of the restriction on the defense of negotiable instrument and its basis in legal philosophy. First, its significance. A discussion is presented on such concepts as defense of negotiable instrument, restriction on the defense of negotiable instrument, as well as counter-restriction on the defense of negotiable instrument, with the relationship in between. Restriction on the defense of negotiable instrument refers to the defense entailed, while negotiable instrument rights enforced, by the interested parties of negotiable instrument from the conflicts on the attribution and enforcement of the negotiable instrument. It is, based on the property of the negotiable instrument, due restriction on the potential ground of pleading, the enforcement of which takes certain conditions without which the invocation of the restriction will be excluded, thus leading to the counter-restriction on the defense of negotiable instrument, a return to equitable values. The relationship revealed by the three concepts marks an interaction of transaction safety and real equity in the acts of negotiable instrument. Secondly, the basis in legal philosophy of the restriction on the defense of negotiable instrument studied from two aspects: traditional theory about restriction on the defense of negotiable instrument; facialism and restrictions on the defense of negotiable instrument. The paper maintains that transaction safety is put emphasis on in the act of negotiable instrument; on the other hand, equity will be imported in stringent practice. Transaction safety and static safety find smooth coordination and supplement, not supplant, each other in facialism, the gist of which includes that any identifiably typical indication of the right and intention, whether compliant with the real ones, will be inferred as the basis for the right and intention through indication, thus securing transaction safety. The realization of the safety is by the protection of the real oblige. The forms and types of the restriction are determined by the extent of necessary requested for transaction safety. Difference in the number of parties and the complexity of legal relations in various stages of negotiable instrument activity has influence on the requirements for transaction safety. Generally, the degrees are in proportion to that in the complication for the parties to obtain pertinent information about transaction. To make it move specific, for direct parties, requests are low and restriction on the defense of negotiable instrument less frequent due to a sharing of information on both sides. Nevertheless, the reverse is true with the indirect parties because of a lack of familiarity. Part two: construction of the rule of restriction on the defense of negotiable instrument. The paper dwells on this part from two aspects: the legislative model, the scope of application and the types of the restriction on the defense of negotiable instrument, and the counter-restriction on the defense of negotiable instrument as well. First, legislative model. Passivism shown in the General Law of negotiable instrument and passivism in English-American Law of Negotiable instrument are the legislative models for it. However, neither puts forward the particulars, rendering necessary to give an academic construction. Secondly, defense of negotiable instrument falls into defense against person and against things in traditional law of negotiable i...