In New York, a negotiable instrument is defined by Article 3 of the Uniform Commercial Code (UCC), which New York has adopted (with some modifications). A negotiable instrument is essentially a written document that guarantees the payment of a specific amount of money, either on demand or at a set time, and is transferable from one party to another.

 

Core Characteristics of a Negotiable Instrument (UCC §3-104):

 

  To qualify as a negotiable instrument, the document must:

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1. Be in writing;

2. Be signed by the maker or drawer;

3. Contain an unconditional promise or order to pay a fixed amount of money;

4. Be payable on demand or at a definite time;

5. Be payable to order or to bearer, unless it is a check.

 

Common Examples of Negotiable Instruments:

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• Checks

• Promissory notes

• Drafts

• Certificates of deposit (CDs)

 

Why It Matters:

 

  A negotiable instrument allows the holder to enforce payment and, under the right conditions, to do so free of certain defenses that the original parties to the transaction might raise. If you qualify as a "holder in due course," then you gain additional protections under the UCC.

 

Under New York Law:

 

  New York has adopted UCC Article 3 as found in the New York Uniform Commercial Code (NY UCC § 3-104). While interpretation may vary slightly depending on case law and the context (especially in financial or commercial litigation), the broad principles match those of the national UCC framework.