15 Sep 2022


What is a Negotiable Instrument in Contracts?

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Academic level: College

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In any contract that involves a cash payment, it is essential to come up with a perfect concept of negotiability. A negotiable instrument is a perfect term to refer to the documents with all the relevant signatories and contains a promise to pay up an agreed amount of money for the goods or services offered. It must have a definite time where a bearer will receive the amount. A good example is a check endorsed several times by several individuals, or parties are an example of a negotiable instrument. There are eight requirements to keep in mind when dealing with the negotiable instrument.

It is important to make sure that the doc is in the form of writing. Some people make deals and fail to record them which results in several inconveniences. To ensure that are no cases of messed information, making sure that the agreement is in a transferable form is the best idea. Altering it is quite hard, and also it has a high degree of permanence.

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Signs form the maker, and the drawer must be present. There are no specific places where the individuals must sign, but it can be any place on the instrument. The form that is common is a word, rubber stamp or a word that authenticates writing and on the same note defining the purpose of payment and the order. Words like I/We promise to pay on a certain criterion are frequently used.

Lastly, it indicates that the amount must be payable in demand or at a definite time. There are those that are payable on sight while others must be presented to ensure that the goods are authentic. The drawer or even the maker for that matter can extend the time-bound in any case to a suitable time-frame.


Charleseina Hagood (2017). Business Information to Entrepreneurs, Linkedin. Accessed from https://www.linkedin.com/pulse/requirements-negotiable-instrument-charleseina-hagood (July 2018)

Requirements for Negotiable Instruments (2018). Retrieved from https://nacm.org/pdfs/articles/Negotiable_Instruments.pdf (On July 2018)

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StudyBounty. (2023, September 15). What is a Negotiable Instrument in Contracts? .


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