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In finance, “negotiable” refers to the flexibility or ability to be transferred or sold. It typically describes financial instruments, like checks or bills of exchange, that can be transferred from one party to another through endorsement or delivery. Furthermore, it could also denote that the terms of an agreement can be negotiated or modified.


The phonetic pronunciation of the word “Negotiable” is: niːˈgəʊʃiəb(ə)l.

Key Takeaways

<ol><li>Negotiable refers to the quality of an item, usually a financial instrument, that can be transferred from one party to another. It denotes that the ownership of an item can be transferred via endorsement or delivery.</li><li>Negotiability allows for the free flow of goods, services and money through the economy, and it makes the trading and financing processes more efficient. For example, checks, banknotes, and bills of exchange are all typically negotiable.</li><li>The term ‘negotiable’ can also refer to discussions or agreements where the conditions or terms can be modified or adjusted based on the needs and interests of the parties involved. This provides flexibility and allows for collaborative problem-solving.</li></ol>


The term “negotiable” is significant in business/finance because it fundamentally influences the terms of a transaction or contract. It refers to the flexibility and willingness of two or more parties to alter the terms of an agreement until all involved consent. This principle can apply to a variety of aspects such as price, deadlines, or specifics of a contract. Thus, it empowers parties to come to mutually beneficial terms, promoting fair dealings, healthy competition, and fostering healthier relationships between businesses or between businesses and their customers. Moreover, it allows a better risk management by adjusting values to one’s needs or limits, enhancing the overall efficiency in the business/financial sector.


Negotiable, as a finance/business term, primarily relates to the flexibility and adaptability of terms and conditions of a financial instrument or business contract. Its purpose is to foster an environment of mutual understanding and cooperation, allowing all involved parties to discuss, modify, and ultimately agree upon the terms of a deal to ensure their individual and collective interests and needs are met. An example of this could be the negotiation of a car loan’s interest rate or the price of a house, signifying the importance of negotiation particularly in sales environments, where it can often determine the success of a transaction.The negotiable characteristic of certain financial instruments, such as checks, drafts, promissory notes, or bills of exchange, for instance, makes them transferable from one person to another by endorsement or delivery. This ability to be transferred and accepted universally is used to facilitate and increase commerce, and as such, plays an indispensable role in the global economy, contributing to an efficient financial marketplace. For instance, negotiable instruments provide a reliable method for people to pay for goods or services without the need for cash, and can be passed along to third parties as a form of unconditional payment.


1. Checks: A common example of a negotiable instrument in finance is a check. This is a written order that instructs a bank to pay a specific amount of money from the drawer’s account to the payee’s account. Since checks can be transferred from the original payee to a new payee if it’s endorsed, they are considered negotiable.2. Bills of Exchange: A bill of exchange is another example of a negotiable instrument. It’s a written, unconditional order used primarily in international trade that binds one party to pay a fixed amount of money to another party either on demand or at a predetermined future date.3. Promissory Notes: A promissory note is also a negotiable instrument and serves as a written promise made by one party (the issuer or maker) to pay a specific amount of money to another party (the payee), either on demand or at a fixed or determinable future time. It’s commonly used in various types of financing, like student loans, car loans, or home mortgages.

Frequently Asked Questions(FAQ)

What does the term ‘Negotiable’ mean in finance?

In finance, ‘Negotiable’ refers to the legal term implying that a written document or instrument is transferable from one person to another, either by endorsement or delivery, with the title becoming valid to the transferee.

Can you give me an example of a negotiable instrument?

Yes, examples of negotiable instruments would include checks, promissory notes, bills of exchange, or even certain types of bonds.

What does it mean for a price to be ‘negotiable’ in a business deal?

When a price is ‘negotiable’ in a business deal, it means that the price is not fixed and can change depending on the agreement between the buyer and the seller.

Are all financial documents negotiable?

No, not all financial documents are negotiable. Only those documents that meet certain legal requirements can be negotiable.

What are the benefits of having negotiable instruments in business?

Negotiable instruments facilitate trade and commerce. They replace the need for physical cash, and provide security and convenience in large transactions. They can also be signed over to another person, making transactions more flexible.

Is the term ‘Negotiable’ used in any other fields outside of finance and business?

While this term is commonly used in finance and business, it can also be used in other contexts where an agreement or term is open for discussion or revision.

What is a ‘Non-negotiable’ instrument?

A ‘non-negotiable’ instrument is a one that cannot be transferred or assigned to a different person from the originally named party on the legal document.

Can a negotiable instrument’s terms be changed?

No, the terms and conditions of a negotiable instrument are fixed and cannot be changed once it’s issued.

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