There is an important difference between negotiation and assignment. Let us first try to understand the difference between it.
Negotiability VS. Assignability
(i) The essential distinction between transfer by negotiation and transfer by assignment is that in the latter case, the assignee does not acquire the right of a holder in due course but has only the right, title and interest of his assignor; on the other hand in the former case he acquires all the rights of a holder in due course i.e., rights from equities (Mohammad Khunerali vs. Ranga Rao, 24 M. 654).
(ii) In the case of negotiable instrument, notice of transfer is not necessary while in the case of an assignment of chose in action, notice of assignment must be served by the assignee on his debtor.
(iii) Again, in the case of transfer of negotiable instrument, consideration is presumed but in the case of transfer by assignment, consideration must be proved as in the case in any other contract.
(iv) Negotiation requires either delivery only in the case of “bearer” instrument or endorsement and delivery only in the case of “order instrument”. But of in the case an assignment, Section 130 of the Transfer of Property Act requires a document— be reduced into writing and signed by the transferor.
(v) Endorsements do not require payment of stamp duty whereas negotiation requires payment of stamp duty.
Negotiation Back – An instrument is said to have been negotiated back to him and he is said to have taken up or taken back the negotiable instrument when a person who has been a party to the negotiable instrument takes it again. For example, suppose that that the endorsements on a negotiable instrument are as under.
Negotiability VS. Assignability
(i) The essential distinction between transfer by negotiation and transfer by assignment is that in the latter case, the assignee does not acquire the right of a holder in due course but has only the right, title and interest of his assignor; on the other hand in the former case he acquires all the rights of a holder in due course i.e., rights from equities (Mohammad Khunerali vs. Ranga Rao, 24 M. 654).
(ii) In the case of negotiable instrument, notice of transfer is not necessary while in the case of an assignment of chose in action, notice of assignment must be served by the assignee on his debtor.
(iii) Again, in the case of transfer of negotiable instrument, consideration is presumed but in the case of transfer by assignment, consideration must be proved as in the case in any other contract.
(iv) Negotiation requires either delivery only in the case of “bearer” instrument or endorsement and delivery only in the case of “order instrument”. But of in the case an assignment, Section 130 of the Transfer of Property Act requires a document— be reduced into writing and signed by the transferor.
(v) Endorsements do not require payment of stamp duty whereas negotiation requires payment of stamp duty.
Negotiation Back – An instrument is said to have been negotiated back to him and he is said to have taken up or taken back the negotiable instrument when a person who has been a party to the negotiable instrument takes it again. For example, suppose that that the endorsements on a negotiable instrument are as under.
Difference between Negotiability and Assignability
![Difference between Negotiability and Assignability]()
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