What constitutes a negotiable instrument: a case study A “negotiable instrument” is a commercial instrument, which facilitates the issuance and receipt of consideration, but has no legal tender itself. A negotiable instrument is easily transferable from one person to another. These instruments are called “negotiable” due to their easy transferability from one individual to another. Articles 3.0 and 4.0 of the United Commercial Code (UCC) govern the Negotiable Instruments Act, in the United States. What is a Negotiable Instrument An instrument must meet the following criteria to be defined as a "negotiable instrument"1. Must be in writing and approved by the issuer.2. It must be unconditional. For example, suppose Party A issues an NI to Party B for $1,800 with the understanding that Party B will invest the money in shares approved by Party A in the first year and repay the money to Party A in the second year on a certain date and time, on request. This is a precondition between party A and party B. Therefore, it has a condition associated with it that disqualifies it from being a traded company...