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negotiable instrument An instrument the transfer of which to a transferee who takes in good faith and for value passes a good title, free from any defects or equities affecting the title of the transferor. The most important kinds of negotiable instruments are bills of exchange, cheques and promissory notes. Negotiability may be conferred by custom or statute, and restricted or destroyed by the holder of the instrument. Negotiability is also used popularly as equivalent to transferability. |