What Is Negotiable?

The word negotiable has two distinct mea💛nings in busines💙s:

• A negotiable price is an offer that is open to discussion between a buyer and a seller and may be revised if both agree. An "asking price" is negotiable.
• A negotiable instrument is an asset that has a guaranteed cash value. The owner may swap it for goods, deposit it, or sell it. These assets also are referred to as marketable, transferable, or unregistered.

Understanding Negotiable

Many securities such as stock shares are called negotiable instruments because their ownership can easily be transferred. Nevertheless, the value of a security depends on the mark♏et and varies constantly.

Other negotiable instruments, such as cash, cannot have their value modified. A $10 bill will always be worth $10 (eve💯n though the buying power of $10 can fluctuate with inflation or deflation). Still, it is a negotiable instrument because its legal ownership can be readily tran🐟sferred from one party to another.

A legal document or instrument is termed negotiaꦍble if it is used in lieu of cash. The document represents a promise of paymeꦓnt at some point in the future.

In context, the word negotiable implies a cash value and comes with specific instructions about the timing of future cash flows. The term negotiable is used to suggest the docꦉument comes with the same good faith commitment as cash.

Characteristics of a Negotiable Instrument

Negotiable instruments contain an unconditional promise to render payment for an exact sum, stated on the instrument. The agreement includes instructions on timing, such as on-dema🔯nd or at some date in the future. Some negotiable instruments must be made out to a specific person or party.

Negotiable instruments can be redeemed for cash or transferred to another party. For a piece of paper to be as good as cash or negotiable by law, it mus🐓t be a written document signed by the entity drawing on the instrument—making it marketable or trans😼ferable.

It must also have an explicit order or p🍷romise to pay a specific amount of mon๊ey.

Types of Negotiable Instruments

Several types of negotiable instruments are used in fin🐓ancial transactions.

Check

A check is a dated draft instructing a bankꦇ to make a specific amount payable on demand. Checks can be written by an individual or a company stipulating an amount to be paid to the payee.

When a check is brought to a bank to be cashed or deposited, the money is withdrawn from the payor's bank account.

Certificate of Deposit

A 澳洲幸运5开奖号码历史查询:certificate of deposit (CD) is a negotiable instrument offered by most banks. The bank pays the custome꧃r a set amount of interest in return for depositing money for a set period of time, which may be as little as three months or as long as five years or more.

A CD is negotiable in the sense that the customer may withdraw the balance on demand, although that means lo♍sing some of the interest and paying penalty fees.

Promissory Note

A 澳洲幸运5开奖号码历史查询:promissory note is a document in which one party promises to pay another party a specific amount at a predetermined date in the future. A promissory note contains similar financial details to other negotiable instruments, including the amount owed, date of issuance, interest ra🤪te, and the signature of the issuer or payor.

Promissory notes aඣre typically used to obtain financing from a source other than a financial institution. However, promissory notes are issued by the debtor—the person who owes the money—rather than the creditor, as is typical for most credit transactions.

Bill of Exchange and Drafts

A 澳洲幸运5开奖号码历史查询:bill of exchange is essentially a post-dated check that does not charge interest on the amount owed. It is a binding agreement in which one party is responsible for paying another party on demand at a future date. Bills of exchange are commonly used in international trade between importers and exporters. It is essentially🌞 a pay-on-delivery system.

A 澳洲幸运5开奖号码历史查询:time draft—a type of bil💖l of exchange—makes a demand for payment at some point in the future. A t🐻ime draft is typically used in international trade and allows the buyer (the importer) time to pay the seller of the goods (the exporter).

A 澳洲幸运5开奖号码历史查询:sight draft is also use🍎d in international trade. In it, the importer agrees to pay the stated amount as soon as the goods are delivered.

Negotiable vs. Non-Negotiable

Non-ne✃gotiable indicates that the price of a security or terms of a contract cannot be modified. Non-negotiable can also refer to a security that cannot easily be transferred from one party to another.

Contracts

In 澳洲幸运5开奖号码历史查询:lease agreements, 𒅌the monthly amount owed by the tenant is almost always non-negotiable. The landlord has established a fixed monthly rent or lease payment for the d🌌uration of the contract.

Other contracts might mix negotiable and non-negotiable terms. An employment agreement might allow the salary to be negotiated, but the employee conduct policy wꦇould be non-negotiable.

In this case, negotiable means that a contract's terms can be modified depending on the circumstances and parties involved.

Securities

Certain securities are non-negotiable, as in the case of a 澳洲幸运5开奖号码历史查询:U.S. government savings bond, which can be cashed only by the bond's owner.

Negotiable securities can be transferred, exchanged, or resold between different p♊eople. Coins and paper money are negotiab🐈le securities.

Liquidity

Negotiable securities are considered liquid, meaning they can easily be transferred or sold in the market. Non-negotiable instruments are considered illiquid since they cannot be resold in the market.

The Bottom Line

Negotiable instruments are legally binding documents that guarantee a stated monetary value when their ownership is transferred from one party to another. They can 𒉰be exchanged for goods or cash or can be deposited by thei🌱r owners.

The term negotiable can also describe a contract or offer th♋at is not fixed, meaning its terms are up for discussion.