Bills are a type of negotiable instruments and comprise with right of claim. Bills are considered to be a property because they have value. Therefore, bill can be pledged as security for the performance of an obligation. The Civil and Commercial Code section 926, 751 and 752 also specify that all kinds of bills can be pledged. The pledge of bills poses 3 critical issues. First is legal status of pledgee. According to section 926, pledgee is considered to have a legal status as a holder of the bills which he may exercise all the rights flowing from the bills except for further indorsement. Second is form of pledge of bills. Under section 926 if bills are pledged, the pledge is void unless such bills have an indorsement contains the stipulation “value in security”, “value in pledge” or any other stipulation implying a pledge and deliver such indorsed bills to pledgee. Legal consequence must be in line with section 926 moreover section 751 and 752 must bring to consider depend on each kind of bills. Third is enforcement of pledged bills. Pledgee may enforce on any person who puts his signature upon bills under law of bills or enforce on pledgor under law of pledge. On enforcement of pledged bills if the pledged bills become dues after the obligation for which it is security is due. Pledgee may enforce on pledged bills by public auction according to the Civil Procedure Code section 310. From the research of the 3 issues mentioned above, the provisions of the Civil and Commercial Code in the laws of pledges and bills have specifically enacted covering these issues. The laws can be applied in all 3 issues with no need to modify the provisions of laws only if the person who uses the laws applies and adapts the provisions of laws in accordance with the spirit of its provisions and the characteristics of the pledge of bills.
