The Negotiability of Promissory Notes and Bills of Exchange in the Time of Chief Justice Holt.

This paper explores the development of bills of exchange and promissory notes in England during the seventeenth and eighteenth centuries. It will be argued that the early law of negotiability was founded on a principled interpretation of the common law and that parliament's eventual rejection of this law resulted in a half-century of confusion. This time period, however, was fundamental in the development of the modern principle of negotiability as the courts struggled to create a workable framework for the transfer of written instruments. This paper examines the early conceptual difficulty of transferring written instruments and studies why bills of exchange were capable of transfer, despite the common law's bar on the assignment of choses in action, whereas promissory notes were not considered transferable at common law prior to the eighteenth century. The most important figure for the development of this area was Chief Justice Holt, whose legal interpretation of the transferability of bills of exchange was based on clearly defined and long-standing principles of common law. This interpretation of the common law was viewed as a hindrance to trade, and in response to Holt CJ's decisions, parliament passed the Statute of Anne 1704, allowing promissory notes to be transferable in the same manner as bills of exchange. This began to collapse the distinction between bills of exchange and promissory notes, which created numerous conceptual difficulties in the law of negotiable instruments. It was not until the case of Grant v Vaughan, heard in 1764, that the courts fully developed a new framework for the negotiability of written instruments. This early law displays the difficulty that courts had in developing the underlying principles of the assignment of written instruments, and deciphering its development is fundamental in understanding the modern principle of negotiability. [ABSTRACT FROM AUTHOR]