Essentials of a Negotiable Instrument

1. Written:

Negotiable instrument is in writing.

2. Transferable:

Negotiable instrument is transferable from one person to another. The right of ownership is transferred from one person to another person.

3. Rights of the holder:

Negotiable instrument gives the rights to the creditor to recover something from debtor. The creditor can recover himself or he can transfer his right to another person.

4. Unconditional promise:

Negotiable instrument contains an unconditional promise or order to pay.

5. Certain amount:  

In the negotiable instrument, the promise or order is made for payment of certain amount. The sum payable may be certain notwithstanding that it includes further interest or it is payable at a indicated rate of exchange.

6. Payable in money:

Negotiable instrument is always payable in money.

7. Discharge of debt:

It can be conveniently in the discharge of debts.

8. Transferee can sue in his name:

The transferee of the negotiable instrument can sue the debtor in his own name in case of dishoner.

9. Title:

A holder in due course of negotiable instrument is free from all defects. The term holder in due course means the bona -fied transferee for values of a negotiable instrument who takes it in good faith and before majority. The title of holder in due course is not in any way affected by defective title of the transferor or any party. 


Certain legal presumptions are applicable to all the negotiable instrument. The presumptions are regarding consideration, time, date, stamp and holder in due course.

Parties to Negotiable Instrument:

Following are the parties to the negotiable instrument.

  • Drawer
  • Endorser

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By Hassham

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