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TeachMeFinance.com - explain negotiable instrument negotiable instrument -- a written promise or order signed by the maker to transfer a specified sum of money on demand or at a fixed future time to the person named on the instrument or to the bearer. A negotiable instrument is usually in the form of a check, draft, bill of exchange, promissory note or acceptance. historic definition... Negotiable instrument -- An instrument that may be negotiated ; specifically, in law, an instrument transferable by assignment, indorsement or delivery. There are but three forms of negotiable instruments in common use, viz : Check, bill of exchange (draft) and promissory note. An instrument to be negotiable must contain an unconditional promise or order to pay a certain sum in money; must be payable on demand or at a fixed or determinable future time; must be payable to order or to bearer; and when the instrument is addressed to a drawee he must be named or indicated therein with a reasonable certainty. An instrument which contains an order or promise to do any act in addition to the payment of money is not negotiable. But the negotiable character of an instrument is not affected by a provision which authorizes the sale of collateral securities in case of failure to pay at maturity or authorizes a confession of judgment if not paid at maturity or waives the benefit of any law intended for the advantage or protection of the obligor (the one upon whom the obligation to pay rests) or gives the holder the privilege of requiring something to be done in lieu of payment of money. The validity and negotiable character of an instrument are not affected by the fact that it is not dated or does not specify the value given or that any value has been given or does not specify the place where drawn or where payable or bears a seal or designates a particular kind of current money in which payment is to be made. The maker or drawer or the payee or drawee (the one who is to pay) and the acceptor may be the same person and if that person indorses the instrument and puts it in circulation it becomes a negotiable instrument. About the author Mark McCracken Author: Mark McCracken is a corporate trainer and author living in Higashi Osaka, Japan. He is the author of thousands of online articles as well as the Business English textbook, "25 Business Skills in English". Copyright © 2005 by Mark McCracken, All Rights Reserved. TeachMeFinance.com is an informational website, and should not be used as a substitute for professional financial or legal advice. TeachMeFinance.com and its owner recommend consultation with a professional financial advisor prior to any investment or financial decision. Please read our disclaimer.