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

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adj. (18c)

1. Transferable by indorsement or delivery.  EXAMPLE: a negotiable instrument.

2. Subject to negotiation; bargainable. USAGE: “My usual fee is $100 an hour, but it’s negotiable.
Compare nonnegotiable. [1]

1. (Of a written instrument at common law) 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. [2]

     Excerpt from John S. Ewart’s An Exposition of the Principles of Estoppel by Misrepresentation (1900):

    The truth is that ‘negotiable’ has an original and an acquired signification.  Originally it meant transferable; but afterwards it was used to indicate the supposed effects of transfer, namely, that the transferee

(1) took free from equities, and
(2) could sue in his own name.

     And thus we say that certain choses are transferable, although not negotiable — meaning that they are transferable, but that certain effects do not accompany their transfer.  According to primary meaning, then, a ‘negotiable’ instrument is a transferable instrument; and in that sense the word truly indicated, at one time, a real distinction among choses in action.  The secondary meaning, however — that in which it is taken as indicating the existence of peculiar effects of transfer — was always inaccurate and unscientific; for as to the transferee bringing an action in his own name, that is the normal result or effect of all transferability; and as to honest acquisition conferring title, this secondary meaning arrogates to the transfer of bills and notes alone, an effect

(1) which existed sometimes in the case of other property, and
(2) which sometimes was absent from bills themselves.

     In other words, ‘negotiable’ was used (in the secondary sense) to mark off bills and notes from other choses in action, by a peculiarity of which they not only had no exclusive possession, but which frequently was altogether absent. However dubious to some lawyers this assertion may appear to be, there is at least no doubt

(1) that at the present day all choses in action arising out of contract are transferable; and
(2) that any rule as to transferees of choses in action taking free from equities is by no means confined to bills and notes,

but is, as we have seen, ‘a rule which must yield when it appears, from the nature or terms of the contract, that it must have been intended to be assignable free from and unaffected by such equities. [3]

     Excerpt from John W. Daniel’s A Treatise on the Law of Negotiable Instruments (Thomas H. Calvert ed., 7th ed. 1933):

     “The term ‘negotiable,’ in its enlarged signification, is used to describe any written security which may be transferred by indorsement and delivery, or by delivery merely, so as to vest in the indorsee the legal title, and thus enable him to bring a suit thereon in his own name.  But in a strictly commercial classification, and as the term is technically used, it applies only to those instruments which, like bills of exchange, not only carry the legal title with them by indorsement, or delivery, but carry as well, when transferred before maturity, the right of the transferee to demand the full amounts which their faces call for. ‘Assignable’ is the more appropriate term to describe bonds, and ordinary notes, or notes of hand as they are most commonly called; as ‘negotiable’ is the more fitting term to describe the peculiar instruments of commerce. [4]

2. (Of a written instrument under modern law) capable of being transferred by transfer of possession, or by indorsement and transfer of possession, to a person who thereby becomes the holder.  *  An instrument is negotiable if the transferee thereby becomes a holder, regardless of whether the transferee meets the additional due-course requirements.  See UCC § 3-201.  Negotiation does not always require voluntary delivery.  It can take place by an involuntary transfer of possession, as through a thief.

3. (Of a deal, agreement, etc.) capable of being accomplished.

4. (Of a price or deal) subject to further bargaining and possible change.  Cf. NONNEGOTIABLE; ASSIGNABLE. [2]

1. Having the quality and requisites of negotiability. 11 Am 12d B & N §2.


1. A technical term derived from the usage of merchants and bankers in transferring bills of exchange and promissory notes. 11 Am 12d B & N § 2.

The most vital and distinctive characteristic of a negotiable instrument, the term importing a transferable quality in the instrument to which it is applied; a quality of easy or simple transferability by any possessor; a quality of transferability which permits the transferee to take free of equities and defenses which could be asserted against the transferor of the instrument. 11 Am 12d B & N §2.

A quality turning entirely upon the form of the instrument and the terms in which it is expressed. 11 Am 12d B & N § 2. [5]

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.

The Four Methods of Transfer:

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

  • assignee – a person to whom a property right is assigned, that is, the one to whom an assignment is made.
  • assignor – a person who transfers property rights or powers to another by assignment, whether he be an original owner or an assigner.

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

  • indorser – a person who transfers a negotiable instrument by indorsement. — Also spelled endorser.
  • indorsee – a person to whom a negotiable instrument is transferred by indorsement. — Also spelled endorsee.


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[1]: 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.

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

[3]: John S. Ewart, An Exposition of the Principles of Estoppel by Misrepresentation 384 (1900) (citation omitted).

[4]: 1 John W. Daniel, A Treatise on the Law of Negotiable Instruments 5 2, at 3 (Thomas H. Calvert ed., 7th ed. 1933).

[5]: 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


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