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module 1 negotiable instruments overview traveling with a large amount of cash can be risky in the early days of commerce merchants did not want to carry gold and silver for fear of being robbed so they started accepting paper as payment this paper served as evidence of a merchants debt that a creditor could in turn use his money these debts were part of a system developed in the middle ages called the law merchant which was a collection of rules by which merchants could separate money from the obligation entitling them to collection merchants began to carry this substitute money item that allowed them to use debts owed to them as a form of payment today this substitute money item is called commercial paper both federal consumer law and state law along with private industry arrangements and international agreements govern the modern commercial payment system all states have adopted a model law called the uniform commercial code to regulate business transactions albeit not all in preci