Economic Analysis Of Legal System Of Negotiable Instruments

Law and economics, rising in the United States of America in 1960's, is a new subject to study legal problems in economic theories and methods. The core thought of law and economics is that all legal activities including legislation, judicature and the entire legal system must aim at the effective allocation and use of resources, namely the maximization of efficiency, and can be analysed and directed by economic methods, because they are playing the role of assigning the scarce resources in fact. The rising of law and economics provides a research direction different from the traditional law science. Theoretically speaking, everything reasonable can be analysed and explained by the economic analysis method. The scholars of law and economics, represented by Richard A.Posner, have applied economic analysis method to nearly all legal fields, and have made a great success in the past forty years. Legal system of negotiable instruments is an important part of commercial law, many principles and norms of which embody its constant pursuing for efficiency or benefit. Therefore, it is certain to analyse and study legal system of negotiable instruments from the angle of economics. This thesis takes some basic principles of Marxist economics, classic economics, neoclassic economics, institutional economics, and mainstream law and economics as analysing tools, explains the necessity and feasibility of economic analysis of legal system of negotiable instruments, and analyses respectively the legal system on act, rights and liabilities of negotiable instruments in economic analysis method systematically, attempts to explore the economic logic hidden in the back of them and find out those laws and regulations disconforming to economic principles in the legal system of negotiable instruments, finally takes a positive analysis on the Chinese legal system of negotiable instruments and puts forward some modification suggestions conforming to economic logic and international prevalent rules.Introduction guides the entire thesis, which is the brief summarization of the full content. Introduction first analyses the important theoretical value and practical significance of this thesis, secondly reviews the current studying situation of this topic home and abroad, and then set forth the content and system arrangement ,main research methods, and innovations of this thesis, finally carries on the clarification and definition of some fundamental preconditions of this thesis.Chapter I concerns about the theoretical foundations of economic analysis of legal system of negotiable instruments. First, this chapter defines the concepts of negotiable instruments and legal system of negotiable instruments, introduces the characteristics and functions of them, inspects the courses of the legislation of negotiable instruments in all countries and its international unified movement, and reviews the transitional course of our country's legislation of negotiable instruments, which make us have a full and clear recognization to the general theory of negotiable instruments and legal system of negotiable instruments. Secondly, this chapter introduces and analyses the economic principles which are applied to study the legal system of negotiable instruments, including the Marxist economic analysis of law, Smith Theorem, Coase Theorem, Posner Theorem, and so on.Chapter II concerns about the necessity and feasibility of economic analysis of legal system of negotiable instruments. The necessity is as follows: first, the economic analysis method of law has some incomparable technological advantages over other analytical methods, and is an irreplaceable and powerful analysis tool; second, the traditional analysis method of law has some limitations and requires the economic analysis method of law to overcome the limitations; third, there exists an inherent logical relation between efficiency and legal system of negotiable instruments, so it is the objective requirement of the natural attribute of legal system of negotiable instruments to study legal system of negotiable instruments in economic analysis methods. But the feasibility comes from the coherence of the research precondition of law science and economics, the characteristic of economics to study the allocation of scarce resources and the economic nature of legal system of negotiable instruments.Chapter III concerns about economic analysis of legal system of act of negotiable instruments. First, this chapter analyses the formality and literality of legal system of act of negotiable instruments in economic methods, and points out that the formality of legal system of act of negotiable instruments has the efficiency-enhancing function, and also possibly brings about the loss of efficiency; but the literality of legal system of act of negotiable instruments not only helps the effective use of resources and lessen the adverse choice, but also protects the information-inferior side and promote the economy's efficiency. However, the legal system of blank bill is an exception to the formality and the literality of legal system of act of negotiable instruments. The high-level credit is the economic premise that blank bill appears, the pursuing for efficiency is the economic origin that blank bill appears, and Smith Theorem is the theoretical basis that blank bill exists. Second, this chapter analyses the abstractness and independence of legal system of act of negotiable instruments in economic methods, and points out that the abstractness of legal system of act of negotiable instruments is created especially to adapt to the economy's need, and embodies the Marxist viewpoint that "economy decides the law". Furthermore, the abstractness and independence of legal system of act of negotiable instruments accord with"Coase Theorem II". Finally, this chapter analyses the agency system of act of negotiable instruments in economic methods. It analyses the cost and benefit of the agency system of act of negotiable instruments, whose benefit is embodied in legal and economic function, but whose cost is made up of the commission and other reward that the principal pay to the agent; all kinds of agency costs expended for the collecting of agency information, the negotiating, signing and supervising of agency contract, and the disposal of agency dispute, and so on; the residual loss that the agent's moral hazard brings for the principal. What's more, it analyses the the agency of strictly named principal of act of negotiable instruments, the allocation of burden of proof and the ratification of unauthorized Agency, and the apparent agency of act of negotiable instruments in economic methods.Chapter IV concerns about economic analysis of legal system of rights of negotiable instruments. First, this chapter analyses the duality of rights of negotiable instruments from the angle of institutional economics, points out that it is a combined result of compulsory institutional transition and induced institutional transition, and designs the optimum scheme of exercising the recourse of negotiable instruments. Second, this chapter applies Coase Theorem, Posner Theorem, and Kaldor-Hicks efficiency theory to analyse the goodwill gain system of rights of negotiable instruments, and finds out the initial rights arrangement to pursue low transaction cost, the liability-assigning system to realize the efficiency maximization, and the reasonable choice to maintain the transaction order. Finally, this chapter analyses the effiency value, the justice value and the order value of the time-limitating system of rights of negotiable instruments.Chapter V concerns about economic analysis of legal system of liabilities of negotiable instruments. First, this chapter applies economic analysis methods to the system of forgery of negotiable instruments. As for risk bearing of the forgery in drawing negotiable instruments, both uniform law on negotiable instruments of Geneva and the negotiable instruments laws of USA and UK believe that the forgery risk should be beared by the payer or the direct latter of forger. If negotiable instruments of forgery in drawing is paid or accepted, the payer should bear the risk, which accords with Posner Theorem; If it is not paid or accepted, the direct latter of forger should bear the risk, which also accords with Posner Theorem. But as for the risk bearing of the endorsement forgery, there are great differences between uniform law on negotiable instruments of Geneva and the negotiable instruments laws of USA and UK. The former believe that the risk of endorsement forgery should be beared by the person whose endorsement is forged; but the latter believe that it should be beared by the direct latter of forger. Taking Posner Theorem as measurement standard, the former's rules accords with efficiency principle. Second, this chapter applies economic analysis methods to the release approach of liabilities of negotiable instruments, namely the plea system for negotiable instruments, and analyses its effiency value and justice value.Chapter VI concerns about the positive analysis and perfection of legal system of negotiable instruments of China. This chapter takes the international prevalent legal system as consult, analyses the current situations and the limitations of Chinese legal system of act, rights and liabilities of negotiable instruments respectively, and put forward some modification suggestions conforming to economic logic and international prevalent rules.