Question

what is negotiable instruments and why it is used?

Answer 1

they must come under one of the two categories An instrument becomes negotiable either by statute or by mercantile usage. Among all other negotiable instruments  bills  exchange cheque and promissory notes are the three important negotiable instruments which are widely used in international trade

Answer 2

Negotiable Instruments plays a major role in the trade world. We can also see the use of negotiable instruments in the international trade. We can assume that the international trade is also developing with the negotiable instrument. The nature of negotiable instrument is an area of law which has major influence on any person in his professional field.

While bearer instruments are rarely created as such, a holder of commercial paper with the holder designated as payee can change the instrument to a bearer instrument by an endorsement. The proper holder simply signs the back of the instrument and the instrument becomes bearer paper, although in recent years, third party checks are not being honored by most banks unless the original payee has signed a notarized document stating such.

Alternatively, an individual or company may write a check payable to "cash" or "bearer" and create a bearer instrument. Great care should be taken with the security of the instrument, as it is legally almost as good as cash.