what is a negotiable instrument

A negotiable instrument is a document that guarantees the payment of a specific amount of money to a specified person or assignee. It can be structured as a contract and requires payment either upon demand or at a set time. The term "negotiable" refers to the fact that these instruments are transferable to different parties, and the new holder obtains full legal title to it upon transfer. Examples of negotiable instruments include personal checks, travelers checks, promissory notes, certificates of deposit, and money orders. These instruments are mainly governed by state statutory law, with every state adopting Article 3 of the Uniform Commercial Code (UCC) 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, with drafts and notes being the two categories of instruments.