Legal Definitions - negotiable

The term "negotiable" has several distinct meanings in legal and everyday contexts:

1. (Of a Written Instrument) Capable of Being Transferred with Strong Legal Rights

In a legal and financial context, "negotiable" describes certain types of written documents that represent a promise or order to pay money. These documents can be easily transferred from one person or entity to another. When transferred correctly, the new holder often receives strong legal rights to enforce the payment, sometimes even better than the original owner, especially if they acquired the instrument honestly, for value, and without knowing about any problems with the original transaction.

• Example 1: A Personal Check

  When you write a check to pay for a service, that check is a negotiable instrument. You, the drawer, are ordering your bank to pay a specific amount to the service provider, the payee. If the service provider then endorses the check (signs the back) and deposits it, or even gives it to a third party, the check has been "negotiated." The new holder (the bank or the third party) can then demand payment, generally free from certain defenses you might have had against the service provider (e.g., if the service was unsatisfactory, but the bank already processed the check). This illustrates how the check can be transferred and gives the new holder a strong right to payment.

• Example 2: A Promissory Note for a Business Loan

  Imagine a small business takes out a loan from a bank and signs a promissory note, promising to repay the loan with interest. If this note is drafted to be "negotiable" (meeting specific legal requirements), the bank could potentially sell or transfer this note to another financial institution. The new institution would then have the right to collect payments from the small business, often without being affected by certain disputes or claims the small business might have had against the original bank, provided the new institution acquired the note properly and in good faith. This demonstrates how a financial obligation can be transferred, giving the new holder clear rights to enforce it.

2. (Of a Price or Deal) Subject to Further Bargaining and Possible Change

More commonly, "negotiable" refers to terms, conditions, or prices that are not fixed and can be discussed, debated, and potentially altered through mutual agreement between parties.

• Example 1: Buying a Used Car

  When a car dealership advertises a used car with a price listed as "negotiable," it means the advertised price is not final. A potential buyer can offer a lower price, and the dealership can counter-offer, leading to a discussion until both parties agree on a final sale price. This shows that the price is open to bargaining and change.

• Example 2: Terms of a Rental Lease

  A landlord might present a standard lease agreement, but a prospective tenant could ask for certain clauses to be changed, such as the pet policy or the duration of the lease. If the landlord is willing to discuss and potentially modify these terms, then those aspects of the lease are "negotiable." This illustrates that the conditions of the agreement are not set in stone and can be adjusted through discussion.

3. (Of a Deal, Agreement, etc.) Capable of Being Accomplished

In another sense, "negotiable" can describe a situation or outcome that is possible to achieve or resolve through discussion and agreement, implying that a solution or deal can be worked out.

• Example 1: Resolving a Workplace Dispute

  If two colleagues are having a disagreement, and their manager states, "I believe a resolution to this conflict is negotiable," it means the manager believes it's possible for the colleagues to discuss their issues and arrive at a mutually acceptable solution. It implies that a positive outcome can be achieved through dialogue.

• Example 2: International Treaty Discussions

  When diplomats from two countries meet to discuss a complex trade agreement, an initial assessment might be that "the framework for a new treaty is negotiable." This indicates that despite potential differences, it is considered feasible to reach a comprehensive agreement through further discussions and compromises. It suggests that a successful outcome is within reach.