Negotiable Instrument

Definition:

Pursuant to UCC § 3-104, a document that is signed by the maker or drawer and contains an unconditional promise or order to pay, to order or bearer, a sum certain on demand or at a fixed time to a specified person or an assignee. The payee (the person who receives the payment) must be named or otherwise indicated on the instrument. A document is not a negotiable instrument if it states that it is subject to another agreement.

Checks, bills of exchange, promissory notes, drafts and certificates of deposit are examples of Negotiable Instruments.

In the United Kingdom, negotiability is conferred by statute or market usage.

Return to Glossary