12 Facts About Negotiable instrument

Negotiable instrument is a document guaranteeing the payment of a specific amount of money, either on demand, or at a set time, whose payer is usually named on the document.

In India, during the Mauryan period in the 3rd century BCE, an Negotiable instrument called adesha was in use, which was an order on a banker desiring him to pay the money of the note to a third person, which corresponds to the definition of a bill of exchange as we understand it today.

Negotiable instrument can serve to convey value constituting at least part of the performance of a contract, albeit perhaps not obvious in contract formation, in terms inherent in and arising from the requisite offer and acceptance and conveyance of consideration.

Consideration constituted by a negotiable instrument is cognizable as the value given up to acquire it and the consequent loss of value to the prior holder; thus, no separate consideration is required to support an accompanying contract assignment.

The Negotiable instrument itself is understood as memorializing the right for, and power to demand, payment, and an obligation for payment evidenced by the Negotiable instrument itself with possession as a holder in due course being the touchstone for the right to, and power to demand, payment.

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In some instances, the negotiable instrument can serve as the writing memorializing a contract, thus satisfying any applicable statute of frauds as to that contract.

Rights of a holder in due course of a negotiable instrument are qualitatively, as matters of law, superior to those provided by ordinary species of contracts:.

The law applicable to the specific instrument will determine whether it is a negotiable instrument or a non-negotiable instrument.

Negotiable instrument is the person to whom the bill is addressed and who is ordered to pay.

Negotiable instrument becomes an acceptor when he indicates his willingness to pay the bill.

Latter requirement is referred to as the "words of negotiability": a writing which does not contain the words "to the order of" or indicate that it is payable to the individual holding the contract document is not a negotiable instrument and is not governed by Article 3, even if it appears to have all of the other features of negotiability.

Transferee is a holder in due course and can enforce the Negotiable instrument without being subject to defenses which the maker of the Negotiable instrument would be able to assert against the original payee, except for certain real defenses.