Administrative Law. Negotiable instrument
Negotiable instrument
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A negotiable instrument is a document contemplated by a contract, warranting (1) the payment of money, the promise of order for conveyance of which is unconditional; and, (2) which specifies or describes the payee, who is designated on and memorialized by the instrument and which is capable of change through transfer by valid negotiation of the instrument.
As payment of money is promised subsequently, the instrument itself can be used by the holder in due course as a store of value; although, instruments can be transferred for amounts in contractual exchange that are less than the instrument’s face value (known as “discounting”). Common examples include promissory notes, cheques, and banknotes. Under United States law, Article 3 of the Uniform Commercial Code as enacted in the applicable State law governs the use of negotiable instruments, except banknotes (“Federal Reserve Notes”).
Contents
• 1 Negotiable instruments distinguished from contracts
• 2 Classes o 2.1 Promissory note o 2.2 Bill of exchange
• 3 In the Commonwealth
• 4 In the United States o 4.1 Negotiation and indorsement o 4.2 Usage o 4.3 Exceptions
• 5 See also o 5.1 External links
• 6 References
Negotiable instruments distinguished from contracts
A 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. The underlying contract contemplates the right to hold the instrument as, and to negotiate the instrument to, a holder in due course, the payment on which is at least part of the performance of the contract to which the negotiable instrument is linked. The instrument, memorializing (1) the power to demand payment; and, (2) the right to be paid, can move, for example, in the instance of
From Wikipedia, the free encyclopedia
Jump to: navigation, search
A negotiable instrument is a document contemplated by a contract, warranting (1) the payment of money, the promise of order for conveyance of which is unconditional; and, (2) which specifies or describes the payee, who is designated on and memorialized by the instrument and which is capable of change through transfer by valid negotiation of the instrument.
As payment of money is promised subsequently, the instrument itself can be used by the holder in due course as a store of value; although, instruments can be transferred for amounts in contractual exchange that are less than the instrument’s face value (known as “discounting”). Common examples include promissory notes, cheques, and banknotes. Under United States law, Article 3 of the Uniform Commercial Code as enacted in the applicable State law governs the use of negotiable instruments, except banknotes (“Federal Reserve Notes”).
Contents
• 1 Negotiable instruments distinguished from contracts
• 2 Classes o 2.1 Promissory note o 2.2 Bill of exchange
• 3 In the Commonwealth
• 4 In the United States o 4.1 Negotiation and indorsement o 4.2 Usage o 4.3 Exceptions
• 5 See also o 5.1 External links
• 6 References
Negotiable instruments distinguished from contracts
A 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. The underlying contract contemplates the right to hold the instrument as, and to negotiate the instrument to, a holder in due course, the payment on which is at least part of the performance of the contract to which the negotiable instrument is linked. The instrument, memorializing (1) the power to demand payment; and, (2) the right to be paid, can move, for example, in the instance of