Negotiable Instrument
Listing Details
A negotiable instrument is any document, which permits one party to transfer their rights to a second party by endorsing and delivering the document to the second party. An instrument is only fully negotible when the party transferring it receives value and the party receiving the document can obtain a stronger legal position than the party transferring the document. For example, a first party transfers their rights to the second party, who are unaware that the transaction is fraudulent and negotiates the instrument in good faith and for value. If the first party has transferred their rights against a third party, then the second party retains a valid claim against both the first and third parties. Examples of negotiable instruments in international trade are cheques, Bills of Exchange and promissory notes