The term negotiable is used in describing the price of a good or security that is

not firmly established.

You will often hear the term "negotiable" in reference to the purchase price of a
particular good. The term states that the asking price is not set in stone and can be
adjusted depending on the circumstance.
It can also be used to describe a good or security whose ownership is easily
transferable from one party to another.
Most securities are negotiable, which means that they can be easily transferred
from one party to the next, provided all proper documentation is included. An example
of a negotiable instrument would be a certificate of deposit. These can be easily bought
and sold between different parties.
The term negotiable is also synonymous to the words marketable, transferable or
un-registered.
Requirements of Negotiability
A. Negotiable instrument is a formal contract and carries rights under contract law.
B. Instrument must meet each and every requirement in order to fall within coverage
of Article 3.
C. Missing elements removes instrument from Article 3 and places it under common
law.
D. Requirements for negotiability:
a. Payable to bearer, to order at time it is issued, or first comes into
possession of a holder.
b. Payable on demand or at a definite time.
c. Does not state any other undertaking or instruction by person promising or
ordering payment to do any act in addition to the payment of money.
E. To qualify as negotiable instrument:
a. Be in writing.
b. Be signed by maker or drawer.
c. Contain an unconditional promise or order to pay.
d. Be payable on demand or definite time.
e. Be payable to order or to bearer.
F. Writing Requirement.
a. Right must be tangible.
b. Simplest way to prove that the right exists.
c. Negotiable instruments:
1. Checks
2. Drafts
3. Certificates of Deposit
4. Notes
d. These writings have blanks and are pre-encoded with magnetic ink.
G. Writing Requirement.
a. Commercial paper is equally valid:
1. When prepared on a scratch paper.
2. Blank sheet of paper.
3. Or any other relatively permanent thing.

H. Signature Requirement.
a. Protection from fraud or trickery.
b. Types of signatures:
1. Manual subscription.
2. Any symbol executed or adopted by a party with present intention
to authenticate writing.
c. No difference where instrument is signed.
I. Unconditional Promise or Order Requirement.
a. Promise or order unconditional unless it states:
1. An express condition to payment.
2. The promise or order is subject to or governed by another writing.
3. Rights or obligations with respect to promise or order are stated in
writing.
J. Unconditional Promise or Order Requirement.
a. Promise or order is not made conditional:
1. By reference to another writing for a statement of rights.
2. Because payment is limited to resort to a particular source of funds.
K. Unconditional Promise or Order Requirement.
a. Promise or order requires, as a condition to payment, a countersignature
by a person whose specimen signature appears on the promise or order,
the condition doesnt make the promise or order conditional.


L. Fixed Amount of Money Requirement.
a. Holder must know how much money is to be received when instrument is
paid.
b. Money means a medium of exchange.
c. Instrument is presumed to be issued without interest unless specifically
called for in instrument.
d. Instrument can call for payment of interest at a variable rate.
M. Determinable Time Requirement.
a. Holder wants to know when payment is expected.
b. Instrument payable on demand or at a definite time.
c. Payee or holder able to tell when payable by looking at face amount of
instrument.
N. Words of Negotiability Requirement.
a. Instrument must contain words of negotiability.
1. Pay to the order of; or
2. Pay to bearer.
b. Words important because law reads them as authorizing the free transfer
of the instrument.
c. Failing to use these terms is denial of free transferability and denial of
negotiability.
Endorsement
Endorsement is a legal term that refers to the signing of a document which allows
for the legal transfer of a negotiable from one party to another.
An attachment that is amended or added to a document. Typically, it is an added
provision to an insurance policy. It is also referred to as a "rider".
Types of Endorsement
A. Blank Endorsement is a financial instrument, such as a check, is only
a signature, not indicating the payee. The effect of this is that it is payable
only to the bearer legally, it transforms an order instrument ("pay to
the order of (the payee)") into a bearer instrument("pay to the bearer"). It is
one of the types of endorsement of a negotiable instrument.

B. Restrictive Endorsement is an endorsement signed on the back of a check,
note or bill of exchange which restricts to whom the paper may be transferred.

C. Special Endorsement is an endorsement on negotiable paper that limits the
transfer to a particular person. It is a statement on a writ of the nature of the
claim or the scope of the relief sought.


University of Perpetual Help System DALTA
Alabang-Zapote Road, Pamplona 3, Las Pias City, 1740


Negotiability
Requirements of Negotiability
Endorsement
Types of Requirements

Submitted by:
Santos, Pauline M.
Luciano, Jamaica Karl
Riodique, Rejie Lara E.

Submitted to:
Mr. Andre Oblepias
Basic Finance, CBAA