Meaning of Negotiable Instrument – Negotiable’ means transferable by delivery, and ‘instrument’ is a written document which creates a right in favour of any person. Therefore, a negotiable instrument is a written document which creates a right in favour of any person and which is transferable by delivery.
Definition: A negotiable instrument means a promissory note, bill of exchange or cheque payable either to order or to bearer -Section 13
Characteristics of Negotiable Instrument
|1||It is a written document.|
|2||A negotiable instrument payable to bearer is transferable merely by delivery, whereas a negotiable instrument payable to order is transferable by endorsement and delivery.|
|3||The holder of a negotiable instrument can sue upon it in his own name.|
|4||The consideration is not mentioned on the negotiable instrument. It is presumed that the negotiable instrument has been drawn for a valuable consideration.|
|5||It works in the same manner as money and, like money, it may also be transferred from one person to another.|
|6||The transferor does not need to give notice to any person at the time of transferring the instrument.|
|7||It is the simplest and most convenient mode of assignment of a debt.|
|8||The title to the instrument received by a bonafide transferee is not affected by any defect in the title of the transferor.|
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