What is a negotiable instrument?
A negotiable instrument is a written contract for the payment of money and passes from one person to another as money, in such manner as to give a holder in due course the right to hold the instrument free from defenses available to prior parties. [1]
Negotiable instruments have an integral part and role in the business world. It has an essential function in commercial business transactions in any given country and the world at large.[2] Because these instruments are negotiable, it performs different functions such as but not limited to:
a. used as a substitute for money
b. medium of exchange for most commercial transactions
c. medium of credit transactions
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[2] De Leon & De Leon, Jr. The Law on Negotiable Instruments. (2016).