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KembaraXtra – Legal Terms – Negotiation of a Bill
The negotiation of a bill refers to the transfer of a bill of exchange from one person to another so that the new holder gains legal rights over it.
A bill payable to bearer is transferred simply by delivery, while a bill payable to order requires endorsement together with delivery.
Once properly negotiated, the transferee becomes the lawful holder and may enforce payment under the bill.
The original issue of the bill to the payee does not itself count as negotiation.
This process is essential in commercial law because it allows negotiable instruments to circulate as substitutes for money.
The negotiation of a bill refers to the transfer of a bill of exchange from one person to another so that the new holder gains legal rights over it.
A bill payable to bearer is transferred simply by delivery, while a bill payable to order requires endorsement together with delivery.
Once properly negotiated, the transferee becomes the lawful holder and may enforce payment under the bill.
The original issue of the bill to the payee does not itself count as negotiation.
This process is essential in commercial law because it allows negotiable instruments to circulate as substitutes for money.
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