Also known as: payable to order · payable to bearer · order or bearer paper
Written by attorneys · grounded in primary & secondary sources — see below
A statutory requirement for an instrument to qualify as negotiable. The writing must contain language stating it is payable to bearer or to the order of an identified person when issued or first transferred to a holder.
Select any source to read its text and confirm it supports the definition.
Piper Patel writes a check directing her bank to pay $5,000 to the order of Pavel Petrov. Because the check contains the required words of negotiability when issued, it satisfies the condition and qualifies as a negotiable instrument under Article 3.
Peak Performance issues a promissory note that states it is payable to bearer. The language indicates that whoever holds the note is entitled to payment, meeting the requirement and allowing the note to function as a negotiable instrument.
Language such as payable to bearer, to the order of an identified person, or to cash meets the requirement. An instrument lacking any such words fails to qualify as negotiable.
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Yes. A bearer instrument becomes payable to an identified person when specially indorsed. An order instrument becomes payable to bearer when indorsed in blank.
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The words of negotiability evidence the parties' intent that the instrument be transferable. Without them the instrument remains nonnegotiable even if it meets the other statutory conditions.
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