Negotiable instrument is the document which provides the guarantee of payment of a specific amount of money. This payment is required to be made either on the set time or on demand by the lender.
Nature of negotiable instrument
This instrument also enables the debtor to pay money without any conditions. In this way there is no additional payment or condition imposed on the payer. A negotiable instrument is a document guaranteeing the payment of a specific amount of money, either on demand, or at a set time, without conditions in addition to payment imposed on the payer. There are some common examples of the negotiable instrument. The most common examples of these instruments are the cheques and promissory notes. From this, it can be well defined that the negotiable instruments are always defined by the legislation of finance and economics departments.
Contract of negotiable instrument
There are many descriptions of the negotiable instruments. It is often discussed as being foundational in commercial law. That is why the relevance of negotiable instrument is questioned. Talking in terms of law, this is the document which is contemplated and designed in accordance with the contract. There are some specific characteristics of the negotiable instrument. Few major characteristics of the negotiable instrument are as follows:
A negotiable instrument is the one which offers and warrants the payment of required amount of money and the order or promise of this payment is unconditional. In addition to this, it specifies the payee. This designation is done on the contract and is memorialized by the instrument. Furthermore the negotiable instrument is liable to be changes by the valid proceeding of law and negotiation of the instrument. In case the instrument is transferred according to certain terms and conditions then the holder is designated for the due course of time.
Transfer of negotiable instrument
The transfer of negotiable instruments can be done only for the amounts of negotiable exchange of contract. These kinds of transfers are less than the face value of the negotiable instrument. In this way it can serve to convey and transfer the value which is consisting of at least a little part of the contract.
- Debt ratios
- Liquidity ratios
- Profitability ratios
- Asset management ratios
- Cash Flow Indicator Ratios
- Market value ratios
- Financial analysis
- Business Terms
- Financial education
- International Financial Reporting Standards (EU)
- IFRS Interpretations (EU)
- Financial software
Most WantedFinancial Terms
- Most Important Financial Ratios
- Debt-to-Equity Ratio
- Financial Leverage
- Current Ratio
- Interest Coverage Ratio (ICR)
- Solvency Ratio
- Receivable Turnover Ratio
- Return On Capital Employed (ROCE)
- Accounts Payable Turnover Ratio
- Debt Service Coverage Ratio
Have 10 minutes to relax?Play our unique
Play The Game