Much Ado About Nothing: Achieving Essential Negotiability in an Electronic Environment

The approach adopted here is both historical and analytical. Part II of this Article describes the historical development of assignment law, and demonstrates that it parallels a more general shift of the law away from physical conceptions of property. It concludes that although a paper-based document may still be a practical requirement, there is no longer a valid theoretical justification for not making the law of negotiable instruments media neutral. In Part III we survey the features of negotiable instrument law and compare it generally with the law of assignments. This comparison suggests that the most striking substantive difference between the two systems is the doctrine of good faith purchase. In simple terms, this is the idea that a bona fide purchaser of a negotiable instrument takes it free from all outstanding claims, including contract defenses. Finally, in Part IV we explore the extent to which the consequences of the good faith purchase doctrine can be replicated outside of the negotiability system. We conclude that even in a paper-based legal environment, this key feature of negotiability is readily attainable by parties employing electronic technologies