Negotiability – It is a process by which a document gets the transferability status which means, a document when transferred from one individual to another transfers the benefits as well which are attached to the particular document, conferring legal ownership. This document can be either delivered or endorsed by a person.

Any type of currency note is negotiable through delivery for instance when it changes hands in a sale and purchase process. Similarly, a crossed cheque or a bill of exchange is negotiable through means of endorsement. For instance, when presented in a bank, the cheque instrument is endorsed by the bank for encashing.

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Modern financial operations are based on this negotiability system as currency notes and cheques are the main mode of payment for any kind of transaction. Although, electronic transactions or E-transactions have gained a big time fan base over the past few years, physical money and monetary documents rule the roost when it comes to a majority.

Edited and Updated 08th March 2014

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