Negotiation and Assignment

Difference Between Negotiation and
Assignment
Last updated on June 20, 2017 by Surbhi S
The most important

feature of the negotiable instrument is that it can be freely transferred,
which is possible in two ways, i.e. negotiation and assignment. Negotiation
implies the transfer of negotiable instrument, that takes place in order to
make the transferee, the holder of the instrument.
On the other hand, assignment alludes to the transfer of ownership of the

negotiable instrument, in which the assignee gets the right to receive the
amount due on the instrument from the prior parties.
The most important difference between negotiation and assignment is that

they are governed by different acts. To know more differences amidst the
two types of transfers, take a read of the article below.
BASIS FOR
NEGOTIATION ASSIGNMENT
COMPARISON
Meaning Negotiation refers to the Assignment implies the

transfer of the negotiable transfer of rights, by a
instrument, by a person to person to another, for the
another to make that purpose of receiving the
person the holder of it. debt payment.
Governing Act Negotiable Instrument Act, Transfer of Property Act,

1881 1882
Effected by Mere delivery in case of A written document duly

bearer instrument and, signed by the transferor.
endorsement and delivery
in case of order instrument.
Consideration It is presumed It is proved
Title Transferee gets the right of Assignee's title is subject

holder in due course. to the title of Assignor.
Transfer notice Not required Must be served by

assignee on his debtor.
Right to sue The transferee has the right The assignee has no right
to sue the third party, in to sue the third party in
his/her own name. his/her own name.
Difference Between Negotiation and

Assignment
Last updated on June 20, 2017 by Surbhi S
The most important
feature of the negotiable instrument is that it can be freely transferred,
which is possible in two ways, i.e. negotiation and assignment. Negotiation
implies the transfer of negotiable instrument, that takes place in order to
make the transferee, the holder of the instrument.
On the other hand, assignment alludes to the transfer of ownership of the

negotiable instrument, in which the assignee gets the right to receive the
amount due on the instrument from the prior parties.
The most important difference between negotiation and assignment is that

they are governed by different acts. To know more differences amidst the
two types of transfers, take a read of the article below.
Content: Negotiation Vs Assignment
1. Comparison Chart
2. Definition
3. Key Differences
4. Conclusion
Comparison Chart
BASIS FOR
COMPARISON
Meaning Negotiation refers to the transfer of the Assignment implies the transfer of
negotiable instrument, by a person to rights, by a person to another, for the
another to make that person the holder of purpose of receiving the debt
BASIS FOR
COMPARISON
it. payment.
Governing Act Negotiable Instrument Act, 1881 Transfer of Property Act, 1882
Effected by Mere delivery in case of bearer A written document duly signed by the
instrument and, endorsement and transferor.
delivery in case of order instrument.
Consideration It is presumed It is proved
Title Transferee gets the right of holder in due Assignee's title is subject to the title of
course. Assignor.
Transfer notice Not required Must be served by assignee on his

debtor.
Right to sue The transferee has the right to sue the The assignee has no right to sue the
third party, in his/her own name. third party in his/her own name.
Definition of Negotiation
Negotiation can be described as the process in which the transfer of

negotiable instrument, is made to any person, in order to make that person,
the holder of the negotiable instrument. Therefore the negotiable
instrument aims at transferring the title of the instrument to the transferee.
The term of negotiation for any person except maker, drawer or acceptor,
until payment and in the case of the maker, drawer or acceptor, it should be
until the due date. The two methods of negotiation are:
 By delivery: Negotiation is possible by mere delivery, in the case of
bearer instrument, but that should be voluntary in nature.
 By endorsement and delivery: In the case of order instrument,
there must be endorsement and delivery of the negotiable instrument.
The delivery must be voluntary, with an intention of transferring the
underlying asset, to the transferee to complete the negotiation.
Definition of Assignment
By the term assignment we mean, the transfer of contractual rights,

ownership of property or interest, by a person, in order to realise the debt.
An assignment is a written transfer of rights or property, in which the

assignor transfers the instrument to assignee with the aim of conferring the
right on the assignee, by signing an agreement called assignment deed.
Thus, the assignee is entitled to receive the amount due on the negotiable
instrument, from the liable parties.
Key Differences Between Negotiation and Assignment
The primary differences between negotiation and assignment presented in

the points below:
1. The transfer of the negotiable instrument, by a person to another to

make that person the holder of it, is known as negotiation. The
transfer of rights, by a person to another, for the purpose of receiving
the debt payment, is known as assignment.
2. When it comes to regulation of negotiable instrument, negotiation
governs the Negotiable Instrument, 1881, while the assignment is
regulated by Transfer of Property Act, 1882.
3. Negotiation can be effected by mere delivery in case of bearer
instrument and, endorsement and delivery in case of order
instrument.
4. In the case of bearer instrument, the negotiation is done by mere
delivery of the instrument, but in the case of bearer instrument,
endorsement and delivery of the instrument must be effected.
Conversely, the assignment is effected by written agreement to be
signed by the transferor, both in the case of order and bearer
instrument.
5. In negotiation, the consideration is presumed, whereas, in the case of
assignment, the consideration is proved.
6. There is no requirement of transfer notice, in negotiation. On the
contrary, notice of assignment is compulsory, so as to bind the
debtor.
7. In negotiation, the transferee has the right to sue the third party in
his/her own name. As against, in the assignment, the assignee does
not have any right to sue the third party, in his/her own name.
8. In negotiation, there is no requirement of payment of stamp duty.
Unlike, in the assignment, stamp duty must be paid.
Conclusion
In negotiation, the transfer of negotiable instrument, entitles the transferor,

the right of a holder in due course. On the other extreme, in the assignment
the title of the assignee, is a bit defective one, as it is subject to the title of
assignor of the right.

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Difference Between Negotiation and

The most important

On the other hand, assignment alludes to the transfer of ownership of the

The most important difference between negotiation and assignment is that

Meaning Negotiation refers to the Assignment implies the

Governing Act Negotiable Instrument Act, Transfer of Property Act,

Effected by Mere delivery in case of A written document duly

Consideration It is presumed It is proved

Title Transferee gets the right of Assignee's title is subject

Transfer notice Not required Must be served by

Difference Between Negotiation and

On the other hand, assignment alludes to the transfer of ownership of the

The most important difference between negotiation and assignment is that

Content: Negotiation Vs Assignment

Consideration It is presumed It is proved

Transfer notice Not required Must be served by assignee on his

Negotiation can be described as the process in which the transfer of

By the term assignment we mean, the transfer of contractual rights,

An assignment is a written transfer of rights or property, in which the

Key Differences Between Negotiation and Assignment

The primary differences between negotiation and assignment presented in

1. The transfer of the negotiable instrument, by a person to another to

In negotiation, the transfer of negotiable instrument, entitles the transferor,

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