Studies On The Pledge Of Negotiable Instruments

As valuable securities, bills have negotiability and financial function. Because ofthe simple setting-up procedure and strong guarantee ability, bill pledge is an idealguarantee form. Covering two major areas of civil and commercial law, bill pledge isthe organic combination of both systems of guarantee and negotiable instruments,characterized by theoreticalness and technicality. Legal regulation of bill pledge inChina is relatively backward. The provisions concerned lack instructiveness andmaneuverability, which affects severely the transaction security and the constructionof the market economic credit system. Therefore, it is very necessary to summarizeand analyse the bill pledge system comprehensively and to clarify the operating rulesas well as its effectiveness.This article induces the main problems in the bill pledge system. These problemsare analysed according to the relevant legal provisions and theories. On the basis ofconsidering the feasibility, the article draws the conclusion: Bill pledge achieves acompromise between efficiency and security. It's better than the pledge of generalcreditor's right. The negotiable instruments qualified to be laid in pledge have creditfunction. In China, whether some negotiable instruments could be in pledge or notneeds to be analysed specifically, combining the related legal regulation. The right ofpledge on the bill becomes effective only when the written contract exists and the bill is delivered. Endorsement of pledge is the core of bill pledge system. The right ofpledge on the bill has double effect in both legal domains of guaranty and negotiableinstruments. Consequently, the rights and duties of the parties do not only have thecommon characters of guaranty, but also have the unique characters of bills. Thepledge realizes the right of pledge by exercising the right on the bill. This is thesubstantial significance of bill pledge. Besides, the pledgee's right of endorsementdisposition to the bill should be limited. The legislators should coordinate further therelevant legal regulation, and perfect the specific law provisions to make it explicitand rational.