Home Requirements Negotiable Instrument Defining the Value of Negotiable Instruments

Defining the Value of Negotiable Instruments

Defining the Value of Negotiable Instruments

The primary permutation allowed in terms of adjusting the value of negotiable instruments comes from the fact that negotiable instruments can actually have interest attached to them. This interest is not considered to make the negotiable instrument's value variable. Not all negotiable instruments need have interest, but loans, which can be represented as negotiable instruments, often do have interest involved in some fashion. 

The reason that the interest does not invalidate the contract as a negotiable instrument is that the original value of negotiable instruments with interest is still set within the terms of the negotiable instruments. Furthermore, the formula for determining the interest rate will be similarly set, and therefore, at any given point in time any party should be able to quickly and easily determine the amount of money for which the negotiable instruments are valued under business law.

The fact that negotiable instruments require a definition of the amount of money to be exchanged is fundamental to the role of negotiable instruments as being methods for exchanging money enforced and protected by business law. If the negotiable instruments were not required by business law to have a set amount of money to them, then they would not be definite or concrete enough to successfully enforce.   

The origins of most modern day forms of negotiable instruments likely play another important role in explaining why negotiable instruments must have established monetary amounts under business law. Negotiable instruments in general began as a means of keeping track of debt.

In order to provide some semblance of fairness, then, negotiable instruments would have to involve set sums of money with set interest rates; otherwise, the debts could be easily exaggerated when it came time to collect. 

Negotiable instruments today still cover some forms of loan, but many of the uses are much more focused on orders to pay instead of promises to pay like debts or loans. Nonetheless, the importance of having a set amount of money to be exchanged remains, as enforced by business law. If you need legal advice and assistance, contact business lawyers.