written order to pay, such as an acceptance, check, bill of exchange, or promissory note, transferable from one person to another, provided certain conditions are met. When a person cashes a check, he negotiates the check by signing his name on the back and presenting it to a bank, thereby becoming the legal owner of funds represented by the writing on the face of the check. He may take the funds as cash or deposit the money into an account. Checks are negotiable by endorsement and delivery (also called PRESENTMENT) to the paying bank, which is then obligated to pay the check. If an instrument is payable to the bearer, for example, a bearer stock or bearer bond, negotiation is done by simply presenting the instrument.
Under Article 3 of the Uniform Commercial Code (UCC), an instrument is negotiable if it is: (1) a written instrument signed by the endorser or maker; (2) an unconditional promise to pay a certain amount of money, either on demand or at a future date; and (3) payable to the holder or bearer. A person who becomes a holder in due course of a negotiable instrument by delivery, or by delivery and endorsement, has an unrestricted claim to the instrument, and can sue other people in his or her own name.
unconditional order or promise to pay an amount of money; easily transferable from one person to another. Examples are a check, promissory note, and draft (bill of exchange).
unconditional order or promise to pay an amount of money, easily transferable from one person to another. Examples: check, promissory note, draft (bill of exchange). The Uniform Commercial Code requires that for an instrument to be negotiable it must be signed by the maker or drawer, must contain an unconditional promise or order to pay a specific amount of money, must be payable on demand or at a specified future time, and must be payable to order or to the bearer.
a promise to pay money, transferable from one person to another.
Example: Abel gave Baker a negotiable instrument that contained a promise to pay $1,000 on July 22 of this year. Baker sold the note for $900 cash to Collins by endorsing and delivering it. Collins became a holder in due course.
