Negotiable Instrument


DEFINITION of 'Negotiable Instrument '

A document that promises payment to a specified person or the assignee. The payee (the person who receives the payment) must be named or otherwise indicated on the instrument. A check is considered a negotiable instrument. This type of instrument is a transferable, signed document that promises to pay the bearer a sum of money at a future date or on demand. Examples also include bills of exchange, promissory notes, drafts and certificates of deposit.

BREAKING DOWN 'Negotiable Instrument '

A negotiable instrument is a written order or unconditional promise to pay a fixed sum of money on demand or at a certain time. A negotiable instrument can be transferred from one person to another. Once the instrument is transferred, the holder obtains full legal title to the instrument.

  1. Order Paper

    1. An order paper is a negotiable instrument that is payable ...
  2. Wrongful Dishonor

    A bank's failure to honor a valid negotiable instrument such ...
  3. No Protest - NP

    When a bank receives instructions from another bank not to protest ...
  4. Nonpar Item

    A check, draft or negotiable instrument that a paying bank honors ...
  5. Accommodation Paper

    A negotiable instrument that provides a third-party promise of ...
  6. Altered Check

    A check or another negotiable instrument that has been materially ...
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