Negotiable Obligations for Discount: Notes, Acceptances, DPUs and BPOs
Banking & Finance Law Review (Osgoode Hall Law School), Forthcoming
Wayne State University Law School Research Paper No. 2013-20
Posted: 2 Aug 2013
Date Written: 2013
Abstract
This article, which will be published fall 2013 in the Banking & Finance Law Review (Osgoode Hall Law School), assumes that the discounting of payment obligations generated under a letter of credit is a beneficial commercial practice and that the principle of negotiability enhances that benefit. The article contends, therefore, that commerce should extend the negotiability concept to a pair of new payment obligations which now appear in international trade. The article begins with a brief description of common law and statutory support for traditional negotiable instruments used in trade finance: notes and acceptances. The article then recounts the common law and statutory routes in some jurisdictions that bring the negotiability feature to the Deferred Payment Undertaking (DPU). Finally, the article suggests that by flexible use of the common law or by statutory revision, commercial law could and should extend negotiability to the Bank Payment Obligation (BPO).
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