What is a negotiable instrument?

Section 1 of the Negotiable Instruments Law (Act 2031) gives a definition of a negotiable instrument. It is an instrument which possesses all the elements of negotiability provided in Section 1 of the Negotiable Instruments Law. It does not cover other types of negotiable documents involving the sale or transfer of goods.

The requisites enumerated in Section 1 are deemed essential for the security of commercial transactions as they enable one to tell at a glance whether or not an instrument is negotiable and accordingly, to gauge the risks involved in taking it as security. The Negotiable Instrument Law cannot come into operation unless the document in existence is of the character described in Section 1 of the law. (Kauffman v. National Bank, 12 Phil. 182)

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