The term negotiable instrument means a written document which entities a person to a sum of money. A negotiable instrument is transferable by delivery or by endorsement and delivery. The mere transfer entities a person to the sum of money mentioned therein. A person received it from true owner. The negotiable instrument thus is a document which is legally recognized by custom of trade or law, transferable by delivery or by endorsement. The negotiable instrument act 1881 recognizes three instruments one is promissory note, second is bill of exchange and third is cheques payable to order or to bearer as negotiable instrument.
It is transferable from one person to another by delivery or by endorsement and delivery. The legal holder of the instrument is entitled to receive money mentioned in it. The holder of a negotiable instrument has the right to file a suit in his name for payment from all or any of the concerned parties. It the transferee has accepted the negotiable instrument in good faith then he is not affected by the defective title of the transferor in any way. The three negotiable instrument promissory note, bill of exchange and cheques payable either to order or bearer are called negotiable.
It is transferable from one person to another by delivery or by endorsement and delivery. The legal holder of the instrument is entitled to receive money mentioned in it. The holder of a negotiable instrument has the right to file a suit in his name for payment from all or any of the concerned parties. It the transferee has accepted the negotiable instrument in good faith then he is not affected by the defective title of the transferor in any way. The three negotiable instrument promissory note, bill of exchange and cheques payable either to order or bearer are called negotiable.
