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A negotiable instrument is a specialized type of "contract" for the payment of money that is unconditional and capable of transfer by negotiation. Common examples include cheques and banknotes (paper money). A negotiable instrument is not a contract, as contract formation requires an offer, acceptance, and consideration, none of which is an element of a negotiable instrument. Unlike ordinary contract documents, the right to the performance of a negotiable instrument is linked to the possession of the document itself (with certain exceptions such as loss or theft). The rights of the payee (or holder in due course) are better than those provided by ordinary contracts as follows Negotiation enables the transferee to become the party to the contract, and to enforce the contract in his own name. Negotiation can be effected by endorsement and delivery (order instruments), or by delivery alone (bearer instruments). in addition, it includes the rule of a derivative title which does not allow a property owner to transfer rights in a piece of property greater than his own.
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