DEFINITION of Non-Negotiable
Non-negotiable describes the price of a good or security that is firmly established and cannot be adjusted, or a part of a contract or deal that is considered a requirement by one or both involved parties. Additionally, the term can relate to a good or security whose ownership is not easily transferable from one party to another.
BREAKING DOWN Non-Negotiable
An item can be considered non-negotiable if one party involved in a transaction is not willing to make any changes to a condition that has been set in place. This can refer to the price for a particular good or service, an element within a contract, or a financial product that cannot be exchanged or transferred to a new owner, even through the use of secondary markets.
When an asking price is considered non-negotiable, it means that you cannot try to change the price; it has been firmly established. When one party sets a non-negotiable price, the option to attempt to negotiate has been effectively removed by the first party’s unwillingness to participate in such a conversation.
In regards to securities, if an asset is referred to as a registered security, its price cannot be changed. This can apply to savings bonds, as they have a specified face value, or par, and cannot be negotiated to any other value.
Non-Negotiable Contract Elements
A contract may involve certain non-negotiable tenants. In the cases of leases on rental properties, the amount due as payment may be considered non-negotiable, as it is often a fixed price that must be provided by the tenant to the property owner.
Non-Negotiable Financial Products
Securities and products that are considered non-negotiable cannot be transferred from one party to the next and thus are typically illiquid. An example of a non-negotiable instrument, also referred to as a non-marketable instrument, would be a government savings bond. These can only be redeemed by the owner of the bond and are not allowed to be sold to other parties. These are also known as registered securities, non-marketable or non-transferable securities.
Negotiable instruments can be exchanged or transferred, and they often involve a financial component. For example, a check would qualify as a negotiable instrument, as it can be presented to a financial institution in exchange for actual currency. Funds in physical currency, such as dollar bills, are considered to be negotiable instruments, as they can be easily exchanged between parties.