Assignment on Negotiable Instrument
Course Title: Legal Environment of International Business

Prepared by: Farha Fatema
Date of Submission: 28/04/2011

Executive Summary
Negotiable instruments are written orders or unconditional promises to pay a fixed sum of money on demand or at a certain time. Promissory notes, bills of exchange, checks, drafts, and certificates of deposit are all examples of negotiable instruments. Negotiable instruments may be transferred from one person to another, who is known as a holder in due course. Upon transfer, also called negotiation of the instrument, the holder in due course obtains full legal title to the instrument. Negotiable instruments may be transferred by delivery or by endorsement and delivery.
One type of negotiable instrument, called a promissory note, involves only two parties, the maker of the note and the payee, or the party to whom the note is payable. With a promissory note, the maker promises to pay a certain amount to the payee. Another type of negotiable instrument, called a bill of exchange, involves three parties. The party who drafts the bill of exchange is known as the drawer. The party who is called on to make payment is known as the drawee, and the party to whom payment is to be made is known as the payee. A check is an example of a bill of exchange, where the individual or business writing the check is the drawer, the bank is the drawee, and the person or business to whom the check is made out is the payee.
To be valid a negotiable instrument must meet four requirements. First, it must be in writing and signed by the maker or drawee. Second, it must contain an unconditional promise (promissory note) or order (bill of exchange) to pay a certain sum of money and no other promise except as authorized by the Uniform Commercial Code (UCC). Third, it must