negotiable instrument

Negotiable instruments are documents that are signed by the drawer that include an unconditional promise to pay a specified sum of money, which is payable on demand or at a specified time, and is payable to the order of the bearer. Such instruments include cheques, bank notes, promissory notes, bills of exchange and bank securities.

They are used as a substitute to currency, and may be endorsed by the bearer to another (”negotiated”), to endow the right to recover the sum specified on the instrument from the debtor.

Negotiability may be destroyed or restricted by the bearer of the instrument.

Usage: The enforceability of the negotiable instrument was not affected by defective title.

Related Words: instrument; performance bond; surety; guarantor; debenture; bond.