<P> The consideration constituted by a negotiable instrument is cognizable as the value given up to acquire it (benefit) and the consequent loss of value (detriment) to the prior holder; thus, no separate consideration is required to support an accompanying contract assignment . The instrument itself is understood as memorializing the right for, and power to demand, payment, and an obligation for payment evidenced by the instrument itself with possession as a holder in due course being the touchstone for the right to, and power to demand, payment . In some instances, the negotiable instrument can serve as the writing memorializing a contract, thus satisfying any applicable statute of frauds as to that contract . </P> <P> The rights of a holder in due course of a negotiable instrument are qualitatively, as matters of law, superior to those provided by ordinary species of contracts: </P> <Ul> <Li> The rights to payment are not subject to set - off, and do not rely on the validity of the underlying contract giving rise to the debt (for example if a cheque was drawn for payment for goods delivered but defective, the drawer is still liable on the cheque) </Li> <Li> No notice need be given to any party liable on the instrument for transfer of the rights under the instrument by negotiation . However, payment by the party liable to the person previously entitled to enforce the instrument "counts" as payment on the note until adequate notice has been received by the liable party that a different party is to receive payments from then on . (U.C.C. § 3 - 602 (b)) </Li> <Li> Transfer free of equities--the holder in due course can hold better title than the party he obtains it from (as in the instance of negotiation of the instrument from a mere holder to a holder in due course) </Li> </Ul> <Li> The rights to payment are not subject to set - off, and do not rely on the validity of the underlying contract giving rise to the debt (for example if a cheque was drawn for payment for goods delivered but defective, the drawer is still liable on the cheque) </Li>

What are the disadvantage of bill of exchange