Q.Define a Negotiable Instrument. State any four features of a negotiable instrument.

A negotiable instrument is defined by the specific way it can be made payable and by a bundle of legal features that make it more transferable and more enforceable than an ordinary contract.

Definition. Section 13 of the Negotiable Instruments Act, 1881 defines a negotiable instrument as a promissory note, bill of exchange or cheque payable either to order or to bearer. An instrument 'payable to order' names a certain person (or their order) as entitled to payment; one 'payable to bearer' is payable to whoever lawfully holds it.

Four features of a negotiable instrument:

1. Free transferability. A bearer instrument is transferred by mere delivery; an order instrument is transferred by endorsement followed by delivery. No fresh contract or the original debtor's consent is needed for each transfer, unlike an ordinary debt.
2. Better title for a holder in due course. A person who takes the instrument for consideration, before maturity, in good faith and without cause to suspect a defect can get a title that is actually better than an earlier holder's defective title — a protection an ordinary assignee of a simple debt does not enjoy.
3. Right to sue in one's own name. Whoever currently holds the instrument can sue on it in their own name without needing to join every previous party in the chain of transfer.
4. Statutory presumptions (Section 118). The law presumes, unless disproved, that the instrument was made or drawn for consideration and bears its true date, among other presumptions — shifting the burden of disproof onto the party denying liability, which makes a negotiable instrument far easier to enforce than an ordinary IOU.

(A fifth feature worth remembering: it must always be in writing, signed, unconditional, and for a certain sum — an oral or conditional promise is never a negotiable instrument.)

Students often state the definition correctly but then list generic 'advantages of credit' rather than the Act's own specific features (transferability, holder-in-due-course protection, right to sue, statutory presumptions) — examiners look for these named features, not a general essay on credit instruments.