Negotiable Instrument in United States

Negotiable Instrument Definition

Any written instrument which may be transferred by indorsement and delivery, or by delivery alone, so as to give the indorsee the legal title, and enable him to sue in his own name. 15 Mo. 337. In a narrower sense, those instruments the indorsee of which, under the law merchant, takes free of certain equities and defenses between the. original parties.

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Legal Issue for Attorneys

Any written instrument which may be transferred by indorsement and delivery, or by delivery alone, so as to give the indorsee the legal title, and enable him to sue in his own name. 15 Mo. 337. In a narrower sense, those instruments the indorsee of which, under the law merchant, takes free of certain equities and defenses between the. original parties.

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This definition of Negotiable Instrument is based on The Cyclopedic Law Dictionary. This entry needs to be proofread.

Practical Information

Note: Some of this information was last updated in 1982

A written instrument, signed by a maker or drawer, containing an unconditional promise or order to pay a certain sum of money, which can be passed freely from one person to another in a manner that constitutes the transferee as the holder. If payable to bearer, the instrument may be negotiated simply by delivery; if payable to order, it is negotiated by endorsement of the holder, completed by delivery. The Uniform Commercial Code, which has been adopted by all of the states, governs negotiable instruments. The law states the manner in which a negotiable instrument shall be transferred, and it fixes the rights and duties of the maker, the payee, the holder and the endorser. For example, under the law an endorser of a negotiable instrument vouches for its genuineness. If it is a forgery, the endorser is liable to a holder in due course (in U.S. law) of the instrument after delivery. Strictly speaking, documents of title (such as order bills of lading, warehouse receipts, and stock certificates) are not negotiable instruments because they do not contain an order to pay a sum of money. However, various statutes have given certain documents of title the quality of negotiability. These are known as quasinegotiable instruments.

(Revised by Ann De Vries)

What is Negotiable Instrument?

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