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Presenting a Negotiable Instrument for Payment - Explained

Seeking Payment from the Maker or Drawee

Written by Jason Gordon

Updated at April 6th, 2023

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How does a holder of commercial paper receive payment of the instrument?

A negotiable instrument may be traded for value up until the time of payment. If there is no specified payment time, there is no limit on how long or how many times it can be negotiated to another party. A holder of the instrument may seek payment from a person obligated to pay the instrument through a process known as presentment. Presentment is simply a demand made by a person entitled to enforce the instrument to an individual obligated to pay the instrument. The process for presenting a note for payment is slightly different than presenting a draft. The holder presents a note to the maker of the note, while a holder of a draft presents the draft to the third-party payor (such as a drawee bank). The person making presentment must exhibit the instrument, give reasonable identification, and surrender the instrument.

Note: Presentment duly made means that presentment complied with all agreed requirements (location, time, etc.).

Next Article: Liability to Pay a Negotiable Instrument Back to: COMMERCIAL PAPER

Discussion Question

Can you think of situations where presenting a note would be preferable to presenting a draft, and vice versa?

Practice Question

Mark is the holder and named payee of a promissory note and a check. What does he have to do to receive cash for the instruments?

Related Topics

  • Commercial Paper (Intro)
  • What is Commercial Paper?
  • Negotiable Instrument
  • What are the common types of commercial paper?
  • Promissory Note
  • Cashier's Check
  • Convenience Check
  • Certified Check
  • Substitute Check
  • Bill of Exchange
  • Bank Draft Definition
  • Sight Draft Definition
  • Bankers Acceptance 
  • Who is a Holder of a negotiable instrument?
  • Commercial Paper Funding Program
  • What is Negotiability and why is it important?
  • What is required for commercial paper to be negotiable?
  • Sum Certain (Contracts)
  • Inflation Adjustment Clause
  • When does commercial paper contain an Unconditional promise to pay?
  • Backup Line of Credit
  • What is Payable on Demand or Payable on Time?
  • What is Order Paper and Bearer Paper?
  • Bearer Form
  • How is a payee identified on the negotiable instrument?
  • What rules does the court apply in determining negotiability?
  • How is commercial paper negotiated to a holder?
  • What is Transfer of a negotiable instrument?
  • What is Indorsement of a negotiable instrument?
  • What are the various types of indorsement?
  • Bank Endorsement
  • Blank Endorsement
  • Accommodation Endorsement
  • How does a holder receive payment on a negotiable instrument?
  • Who is potentially liable on (or obligated to pay) a negotiable instrument?
  • When is an individual liable for a representative signing a negotiable instrument?
  • What rules apply if a holder loses a negotiable instrument?
  • When is payment of a negotiable instrument overdue?
  • What effect does a negotiable instrument have on the underlying obligation?
  • What is a holder in due course?
  • What are the requirements for a holder to become a holder in due course?
  • Receive an instrument for value?
  • Receive an instrument in good faith?
  • Receive an instrument without notice of a valid defense?
  • How does discharge of the Underlying Obligation affect a holder in due course?
  • What is the Shelter Rule?
  • Can you limit a transferee from becoming a holder in due course?
  • Personal Defenses?
  • Real Defenses?
  • What is a Claim in Recoupment?
  • What are the rights of a holder in due course if the instrument involves a consumer transaction?
  • What happens if a negotiable instrument is Forged?
  • What happens if a negotiable instrument is Stolen?
  • Guaranty or Guarantee
  • Letter of Guarantee
  • Personal Guarantee
  • What is the role of a Guarantor or Surety of a negotiable instrument?
  • Surety 
  • Cosign
  • Accommodation Paper Definition
  • Secondary Liability
  • Avalize Definition
  • What is an Accord & Satisfaction?
  • What is primary and secondary liability on an instrument?
  • What is Drawer or Maker Liability for a negotiable instrument?
  • What is Transferor Warranty of a negotiable instrument?
  • What is Indorser Warranty of a negotiable instrument?
  • What is Presentment Warranty of a negotiable instrument?
  • What is a warrantors liability for a dishonored note or draft?
  • What is the time limitation for warranty of a negotiable instrument?
  • When are the warranties of a negotiable instrument discharged?
negotiable instrument presentation payable explain

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