NEGOTIABLE INSTRUMENT Meaning and
Definition
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A negotiable instrument is a legal document that guarantees the payment of a specific amount of money to the bearer or designated party. It is a written instrument that serves as a form of currency, similar to cash or a check, allowing for the transfer of payment from one party to another.
Negotiable instruments are commonly used in commercial transactions for convenience and security purposes. They provide a way to exchange money without the need for physical currency, reducing the risk of loss or theft during transfer. These instruments are regulated by specific laws that govern their creation, transfer, and enforcement.
To be considered negotiable, an instrument must meet certain criteria. It must be in writing, signed by the person creating it (known as the maker or drawer), and contain an unconditional promise or order to pay a specified amount of money. The document should also be payable on demand or at a specific future time, to the bearer or a designated person.
Common examples of negotiable instruments include checks, promissory notes, bills of exchange, and certificates of deposit. They can be transferred from one person to another through endorsement or delivery, allowing for their use in various financial transactions.
In summary, negotiable instruments are legally binding documents that facilitate the transfer of money between parties. They are standardized and regulated tools used in commercial transactions, providing convenience and security for the exchange of funds.
Common Misspellings for NEGOTIABLE INSTRUMENT
- begotiable instrument
- megotiable instrument
- jegotiable instrument
- hegotiable instrument
- nwgotiable instrument
- nsgotiable instrument
- ndgotiable instrument
- nrgotiable instrument
- n4gotiable instrument
- n3gotiable instrument
- nefotiable instrument
- nevotiable instrument
- nebotiable instrument
- nehotiable instrument
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- negktiable instrument
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- hnegotiable instrument
Etymology of NEGOTIABLE INSTRUMENT
The word "negotiable" is derived from the Latin word "negotiabilis", which means "transferable" or "capable of being dealt with". It is derived from the Latin term "negotium", which means "business" or "commercial transaction".
The term "instrument" has its origins in the Latin word "instrumentum", which refers to a tool or device used to perform a task.
When combined, the term "negotiable instrument" essentially denotes a document or written contract that is transferable and can be used as a means of payment or as evidence of a financial obligation.
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