Also known as: non-negotiable · not negotiable
Written by attorneys · grounded in primary & secondary sources — see below
A written promise or order that bears a conspicuous statement declaring it not negotiable or not governed by UCC Article 3, thereby preventing its transfer by indorsement or delivery as a negotiable instrument.
Nalini Narula issues a promissory note to Norman Nash promising payment of $50,000 in six months. The note includes the words 'this note is not negotiable' printed in bold capital letters across its face. When Nash attempts to transfer the note to a third party, the transferee cannot qualify as a holder in due course because the conspicuous statement removes the note from UCC Article 3 coverage.
A school district requires student athletes to sign a consent form containing a statement that the policy is nonnegotiable. The student refuses to sign and challenges the requirement. The court treats the form as a nonnegotiable demand that cannot be altered through individual negotiation.
Select any source to read its text and confirm it supports the definition.
The Treasury issues special nonnegotiable obligations exclusively to an unemployment trust fund. A company challenges the restriction on market trading. The obligations remain nonnegotiable by their terms and cannot be transferred to outside investors.
A company issues a note to investors that states on its face it is not a negotiable instrument. When the note is later transferred, the recipient cannot enforce it free of defenses because the conspicuous legend prevents Article 3 status.
A party assigns a contract claim and includes language stating the assignment is nonnegotiable. The assignee attempts to bring suit in federal court based on diversity. The assignment's nonnegotiable character prevents the assignee from invoking the original parties' citizenship for jurisdictional purposes.
Two corporations negotiate a merger agreement containing a clause labeled nonnegotiable that locks in a voting agreement. A shareholder challenges the clause after the board seeks to amend it. The court enforces the term as written because its nonnegotiable designation prevents unilateral change.
A conspicuous statement that a promise or order is not negotiable removes the writing from the definition of an instrument under UCC Article 3. The holder therefore cannot claim holder-in-due-course status or the protections that accompany negotiability.
Supporting sources
A pre-printed form described as nonnegotiable supports a finding of procedural unconscionability because it signals a take-it-or-leave-it presentation that deprives the weaker party of meaningful choice. Courts weigh this factor together with substantive unfairness when deciding whether to refuse enforcement.
Supporting sources
The court may refuse to enforce the unconscionable term, sever it from the remainder of the agreement, or limit its application to avoid an oppressive result. It need not strike the entire contract.
Supporting sources
…rent or franchise fee in exchange for the added risk of suit in Florida. He signed a standard form contract whose terms were non-negotiable and which appeared in some respects to vary from the more favorable terms agreed to in earlier discussions. In fact, the final contract required a minimum monthly rent computed on a base…