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.