negotiable instrument – formal document signed by the maker or drawer; with a promise or order to pay, on demand or at a certain time, an amount of money, to order or to bearer

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negotiable instrument:

1. A written instrument that

(1) is signed by the maker or drawer,
(2) includes an unconditional promise or order to pay a specified sum of money,
(3) is payable on demand or at a definite time, and
(4) is payable to order or to bearer. UCC § 3-104(a).  * 

Among the various types of negotiable instruments are bills of exchange, promissory notes, bank checks, certificates of deposit, and other negotiable securities. — aka negotiable paper; negotiable note. [1]

Literally, an instrument having the transferable quality known as negotiability.  An instrument, constituting a valid contract, for the payment of money in a certain, definite sum, to order or bearer, on demand, at sight, or in a certain time, or on the happening of an event which must occur, and payable absolutely, not on a contingency. 11 Am 12d B & N § 56.

An instrument in writing signed by the maker or drawer; containing an unconditional promise or order to pay a sum certain in money; payable on demand, or at a fixed or determinable future time; payable to order or to bearer; and where addressed to a drawee, the latter is named or otherwise indicated with reasonable certainty. Uniform Negotiable Instruments Law § 1; Anno: 44 ALR2d 57, § 11.

An instrument signed by the maker or drawer; containing an unconditional promise or order to pay a sum certain in money and no other promise, order, obligation, or power given by the maker or drawer except as authorized by statute; payable on demand or at a definite time; and payable to order or to bearer. UCC § 3-104(1).

A bill of exchange, draft, check, promissory note, certificate of deposit, bearer bond, or other instrument to which there is extended the quality of negotiability by the Uniform Commercial Code or other statute. 11 Am J2d B & N § 6. [2]

1. Under the Uniform Commercial Code, a signed writing that orders or promises payment of money if: it is unconditional, it is in a fixed amount, it is payable on demand to bearer or to order or at a definite time, and it “does not state any undertaking or instruction by the person promising or ordering payment to do any act in addition to the payment of money.” (EXAMPLES: a check; a money order; a certificate of deposit; a bond; a note, a bill of lading; a warehouse receipt.)  Negotiable instruments are also referred to as commercial paper or negotiable paper. [3]

     Excerpt from Thomas E. Holland’s The Elements of Jurisprudence (13th ed. 1924):

     “What are called ‘negotiable instruments,’ or ‘paper to bearer,’ such as bills of exchange, or promissory notes, do really pass from hand to hand, either by delivery or indorsement, giving to each successive recipient a right against the debtor, to which no notice to the debtor is essential, and which, if the paper is held bona fide and for value, is unaffected by flaws in the title of intermediate assignors. [4]

     Excerpt from James J. White & Robert S. Summers’ Uniform Commercial Code (4th ed. 1995):

     “One must first understand that a negotiable instrument is a peculiar animal and that many animals calling for the payment of money and others loosely called ‘commercial paper’ are not negotiable instruments and not subject to the rules of Article 3. [5]

Related Terms:

negotiable – capable of being transferred by delivery or indorsement when the transferee takes the instrument for value, in good faith, and without notice of conflicting title claims or defenses.  The four methods of transfer include indorsement, assignment, delivery, and

transfer – negotiation of an instrument according to the forms of law: the four methods of transfer are by indorsement, by delivery, by assignment, and by operation of law.


  • indorsement – the signing of one’s name on the back of a negotiable instrument, to transfer title to the paper to another person, usually to guarantee payment.


  • assignment – the transfer of property or right in property, or the instrument of such transfer.


maker – one who obligates himself by entering into a contract, executing (signing) a promissory note, drawing a bill of exchange, or, in the case of lawmakers, framing, promulgating, or ordaining.

  • accommodation maker – the drawer of a bill, or the maker of a note as a surety, to which he has put his name for the purpose of accommodating, by a loan of his credit, some other person who is to provide for the bill or note when it falls due.
  • prime maker the person who is primarily liable on a note or other negotiable instrument.

bill of exchange – an unconditional written order (often a check) signed by the drawer directing the drawee or payor, to pay a sum of money, on demand or at a definite time, to a third person (either the payee or the bearer).— aka draft; draught; letter of exchange.

  • drawer – someone who directs a person or entity, usually a bank, to pay a sum of money stated in a draft or bill of exchange (i.e. a person who writes a check). UCC § 3-103(a)(5)
  • drawee – the person upon whom a draft or bill of exchange is drawn; the person to whom the paper is presented for acceptance and payment (the drawee of a check is always a bank).

suretyship – a contractual relation, resulting from a primary, original, absolute, and unconditional engagement, whereby one person, the surety, engages to be answerable for the debt, default, or miscarriage of another, the principal.

  • surety – a person who promises to pay the debt or to satisfy the obligation of another person (the principal); as opposed to the obligation of the guarantor, the obligation of a surety is both primary and absolute; that is, not depending upon a default by the principal.
  • principal – the person for whose debt or default a surety is responsible under a contract of suretyship.

presentment – the formal production of a negotiable instrument as a demand for acceptance or payment made on the maker, acceptor, drawee, or other payor by or on behalf of the holder.

  • presentment for acceptance – production of a negotiable instrument, to the drawee, acceptor, or maker, for his acceptance and agreement to pay the bill, usually at some time in the future.
  • presentment for payment –  production of a negotiable instrument, by the holder, to the drawee, acceptor, or maker, on or after the date the instrument matures, to demand payment.


Disclaimer: All material throughout this website is compiled in accordance with Fair Use.

[1]: Black’s Law Dictionary Deluxe Tenth Edition by Henry Campbell Black & Editor in Chief Bryan A. Garner. ISBN: 978-0-314-62130-6

[2]: Ballantine’s Law Dictionary with Pronunciations
Third Edition
 by James A. Ballantine (James Arthur 1871-1949).  Edited by William S. Anderson.  © 1969 by THE LAWYER’S CO-OPERATIVE PUBLISHING COMPANY.  Library of Congress Catalog Card No. 68-30931

[3]: Ballantine’s Law Dictionary Legal Assistant Edition
by Jack Ballantine 
(James Arthur 1871-1949).  Doctored by Jack G. Handler, J.D. © 1994 Delmar by Thomson Learning.  ISBN 0-8273-4874-6.

[4]: Thomas E. Holland, The Elements of Jurisprudence 315-16 (13th ed. 1924).

[5]: James J. White & Robert S. Summers, 2 Uniform Commercial Code 5 16-1, at 70 (4th ed. 1995).



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