negotiable instrument

A negotiable instrument is a document guaranteeing the payment of a specific amount of money, either on demand, or at a set time, with the payer usually named on the document. More specifically, it is a document contemplated by a contract, which promises the payment of money without condition, which may be paid either on demand or at a future date.

The term can have different meanings, depending on what law is being applied and what country it is used in and what context it is used in.

A negotiable instrument can serve as a substitute for cash or as an extension of credit. Such instruments are used extensively in the business world as a means of extending credit and transacting business.

The laws governing these types of instruments have been standardized to a large degree by statutes, such as the Uniform Commercial Code in the United States, which provides a legal framework for the creation and use of negotiable instruments.

There are several types of negotiable instruments, including checks, promissory notes, and drafts (a type of check without the drawee). Other examples include bills of exchange, and some types of investment securities.

Each type of negotiable instrument has its own set of features, benefits, and drawbacks. For example, a check is a type of negotiable instrument that is drawn on a bank and payable on demand, while a promissory note is a written promise to pay a certain amount of money to a specific person or entity, either on demand or at a specified future date.