Negotiable Instrument
A negotiable instrument is a written document that promises or orders the payment of a specific sum of money to the bearer or designated person. These instruments are transferable from one party to another, typically serving as a form of payment or a financial instrument. The key characteristic of negotiable instruments is their ease of transferability and the recognition of certain rights associated with them.
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Key Points
This cover will cover the following topics and more.
Types
Common types of negotiable instruments include promissory notes, bills of exchange, and checks. Each type serves different purposes but shares the common feature of being transferable.
Characteristics
To be considered negotiable, an instrument must meet certain criteria, known as the "HAGUE" criteria:
Transferability
ne of the key features of negotiable instruments is their transferability. They can be transferred from one party to another by delivery or endorsement, allowing for easy circulation and convenience in commercial transactions.
Holder in Due Course
A concept related to negotiable instruments is the "holder in due course," who acquires the instrument for value, in good faith, without notice of any defects, and before it is due. A holder in due course enjoys certain protections under the law when dealing with negotiable instruments.
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Resources
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