Negotiable is a financial term for an instrument whose ownership can be transferred from one party to another, so the right to receive payment moves to the new holder. It covers documents such as cheques, promissory notes, and bills of exchange.
A negotiable instrument changes hands by delivery or by endorsement, the signature that assigns it onward. The holder then gains the legal right to collect the stated sum on the stated date, which is why these instruments can circulate as a form of payment.
A negotiable instrument differs from a non-negotiable one, which is tied to a named payee and cannot be passed on, such as a cheque marked "not negotiable". The word also carries a second sense in finance, where a price, fee, or contract term is described as negotiable when it is open to discussion before both sides agree.
A company holds a promissory note for USD 10,000, payable by another party on a set date. The company owes a supplier the same amount.
The company endorses the note and hands it to the supplier as payment:
USD 10,000 right to payment, transferred
The note is negotiable because that right to collect the USD 10,000 passes to the supplier, who can claim it on the due date.