The-definition.com

Definition

Negotiable Instrument

Negotiable Instrument is a negotiable instrument is one which, by the custom of trade, passes from hand to hand by delivery so as to give a bona fide holder for value, a good title to the instrument notwithstanding that the transferor may have had defective title. The characteristics of negotiable instruments are:

  • The title of them passes by mere delivery, or where necessary by endorsement followed by delivery Westpac Banking Corporation ABN 33 007 457 141 Glossary 11 March 2002
  • No notice of such transfer need be given to the party liable on the instrument
  • A holder in due course can sue in his own name

A holder in due course does not take the instrument subject to equities and in fact may obtain a better title than the transferor Bills of Exchange, Cheques and Promissory Notes are three kinds of negotiable instruments.

Share it:  Cite

More from this Section

  • Draft
    Draft is an instrument completed by a creditor ordering a debtor to pay a specific sum ...
  • Vicarious liability
    Vicarious liability is a responsibility for damage done by the driver of an automobile ...
  • Truth-in-Savings Act
    Truth-in-Savings Act is the law passed by the U.S. Congress in 1991 that requires depository ...
  • Specified (dread) disease policy
    Specified (dread) disease policy is a limited policy that covers only certain diseases ...
  • Funded debt
    ...