What is Negotiable Instrument?

Legal Definition
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 named on the document. More specifically, it is a document contemplated by or consisting of 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.

Examples of negotiable instruments include promissory notes, bills of exchange, banknotes, demand draft and cheques.

Because money is promised to be paid, the instrument itself can be used by the holder in due course as a store of value. The instrument may be transferred to a third party; it is the holder of the instrument who will ultimately get paid by the payer on the instrument. Transfers can happen at less than the face value of the instrument and this is known as discounting; e.g., this may happen if there is doubt about the payer's ability to pay.
-- Wikipedia
Legal Definition
In general, any financial document that directs payment to its holder or a named party. More specifically, a negotiable instrument must be written, signed by the maker, include an unconditional promise or order to pay a sum of money to the holder or specific party, and be payable any time or on a specific date. Examples include bank checks, promissory notes, certificates of deposit, and bills of exchange.
Legal Definition
Negotiable instruments are mainly governed by state statutory law. Every state has adopted Article 3 of the Uniform Commercial Code (UCC), with some modifications, as the law governing negotiable instruments. The UCC defines a negotiable instrument as an unconditioned writing that promises or orders the payment of a fixed amount of money. Drafts and notes are the two categories of instruments. A draft is an instrument that orders a payment to be made. An example is a check. A note is an instrument that promises that a payment will be made. Certificates of deposit (CD's) are notes. Drafts and notes are commonly used in business transactions to finance the movement of goods and to secure and distribute loans. To be considered negotiable an instrument must meet the requirements stated in Article 3. Negotiable instruments do not include money, payment orders governed by article 4A (fund transfers) or to securities governed by Article 8 (investment securities).

The rule of derivative title, which is applicable in most areas of the law, does not allow a property owner to transfer rights in a piece of property greater than his own. If an instrument is negotiable this rule is suspended. A good faith purchaser, who does not have any knowledge of a defect in the title or claims against it, takes title to the instrument free of any defects or claims. In relation to the suspension of the rule of derivative title, Article 3 provides for warranties to protect the parties in transactions involving negotiable instruments.

Checks are negotiable instruments but are mainly covered by Article 4 of the UCC. See also Banking Law. Secured transactions may contain negotiable instruments but are predominantly covered by Article 9 of the UCC. See also Secured Transactions. If there is a conflict between the Articles of the UCC both Article 4 and 9 govern over Article 3.

The United Nations Convention on International Bills of Exchange and International Promissory Notes would preempt Article 3 in the case of international transactions if the United States were to join. (As of late 1994 it had not ratified the treaty.)
Legal Definition
A general name for bills, notes, checks, transferable bonds or coupons, letters of credit, and other negotiable written securities. Any written securities which may be transferred by endorsement and delivery or by delivery merely, so as to vest in the endorsee the legal title, and thus enable him to sue thereon in his own name. Or, more technically, those instruments which not only carry the legal title with them by endorsement or delivery, but carry as well, when transferred before maturity, the right of the transferee to demand the full amounts which their faces call for. Daniel, Neg. Inst. § la. A negotiable instrument is a written promise or request for the payment of a certain sum of money to order or bearer. CSv. Code Cal. § 3087.
-- Black's Law Dictionary
Legal Definition
An order signed by an endorser to pay the holder without conditions.