Negotiable Instruments

Question 1

What is a negotiable instrument?

Answer 1

A negotiable instrument is a written document or paper instrument that is used as a substitute for money, or as a way of extending credit e.g a cheque and promissory note respectively

Question 2

What are the characteristics that make up a negotiable instrument?

Answer 2

1. Signature:
   It must contain the signature of the one establishing it otherwise known as the drawer
2. Fixed Amount:
   The amount it represents must be fixed it can not be ambiguous or vague
3. Unconditionality:
   There can not be conditions attached to cashing it out or using it
4. Time specificity:
   Unless it is to be paid on demand the negotiable instrument must have a fixed time for its payment
5. Transferability: A negotiable instrument must be transferable from one party to another. This means that the instrument must be able to be endorsed or assigned to another person or entity, allowing it to be passed from one holder to another.