What are Negotiable Instruments? Explain its essential characteristics under the Negotiable Instruments Act, 1881.

Meaning of Negotiable Instruments: Negotiable Instruments is an instrument (the word instrument means a document) which is freely transferable (by customs of trade) from one person to another by mere delivery or by indorsement and delivery. The property in such an instrument passes to a bonafide transferee for value. The Act does not define the term ‘Negotiable Instruments’. However, Section 13 of the Act provides for only three kinds of negotiable instruments namely bills of exchange, promissory notes and cheques, payable either to order or bearer. Essential Characteristics of Negotiable Instruments It is necessarily in writing.It should be signed.It is freely transferable from one person to another.Holder’s title is free from defects.It can be transferred any number of times till its satisfaction.Every negotiable instrument must contain an unconditional promise or order to pay money. The promise or order to pay must consist of money only.The sum payable, the time of payment, the payee, must be certain.The instrument should be delivered. Mere drawing of instrument does not create liability.