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Non-negotiable – Meaning in Business and Finance

What Is Non-negotiable?

Non-negotiableNon-negotiable means not open for debate or modification. As a result, it is a condition that cannot be changed through discussion or negotiation.  In business, it can refer to the price of a good that is firmly established.  Therefore, the price cannot be adjusted and is considered a fixed requirement by both involved parties. In this context, non-negotiable refers to a term or condition that is not open to negotiation.

In Finance, non-negotiable refers to something that cannot be bought, sold, exchanged, or transferred. The term relates to a financial instrument whose ownership is not easily transferable from one party to another.   Certain securities and financial assets are not transferable from one party to another. For example, a certificate of deposit (CD) can only be redeemed by the account holder. As a result, a CD is considered a non-negotiable financial asset and a person is unable to sell his or her CD to a third party.

Non-negotiable vs Negotiable Instruments

The opposite of non-negotiable is negotiable. When an asking price or contract is described as negotiable, it suggests that it is not fixed and can be changed depending on the circumstances. Instruments of this type can also be easily swapped or transferred.

Negotiable Instruments

A negotiable instrument is a signed document that offers a specific person or the assignee a sum of money. It is a transferable, signed document that guarantees payment of a quantity of money to the bearer at a later period or on demand. On the instrument, the payee, or the person receiving the payment, is named or otherwise stated. Negotiable instruments are transferable in nature.  They allow the holder to take the money as cash or use payment from the transaction’s or the holder’s preferred manner. The fund amount indicated on the document includes a notation as to the particular amount promised.  It must be paid in full either on-demand or at a specified later date. A negotiable instrument is one that can be passed from one person to the next. The holder of the instrument receives full legal title to the instrument once it is transferred.

A key element to a negotiable instrument is that it can be transferred from one person to another. Once the instrument is transferred, the new holder obtains a full legal title to the instrument.

  • Bank checks – A check, for example, is a negotiable instrument since it can be given to a financial institution in exchange for cash.
  • Currency – Because they may be easily traded between parties, funds in physical currency, such as dollar bills, are also considered negotiable instruments.
  • Securities – Most securities are also negotiable, as long as all necessary legal documentation is included.

Non-negotiable Instruments

Securities and products that are non-negotiable cannot be transferred from one party to the next. A government savings bond is an example of a non-negotiable instrument, often known as a non-marketable instrument. They can only be redeemed by the bond’s owner, and they can’t be sold to anyone else.

Marketable and Non-marketable

Marketable securities consist of bills, notes, bonds, and TIPS. Non-marketable securities consist of Domestic, Foreign, REA, SLGS, US Savings, GAS and Other. Marketable securities are negotiable and transferable and may be sold on the secondary market. (Source:

How Does Non-negotiable Work and Why Does it Matter?

If either of the parties in a deal is unwilling to make any adjustments to a condition that has been established, the item might be deemed non-negotiable. This could be a price for a specific good or service, a contract clause, or a financial product that cannot be swapped or transferred to a new owner despite the use of secondary markets. Certain securities, contracts, and assets are not transferable from one party to the next.

  • Certificates of deposit – A certificate of deposit (CD), for example, can only be redeemed by the account holder. A person is unable to sell his or her CD to a third party.
  • Contract clauses – A phrase or condition in a legal contract that is non-negotiable means that it cannot be changed.
  • Firmly fixed sale prices – A homeowner, for example, may agree to sell his home if he obtains a minimum of $290,000. If the price is set in stone, he will not adjust it even if a buyer offers $285,000.

The market for non-negotiable securities is often illiquid because they cannot be transferred. It’s vital to remember that the side with the most power has the least incentive to compromise when it comes to a price. For example, a large corporation such as Walmart will not bargain with a consumer over the price of its goods.  However, a small business owner may be ready to make concessions on the same item.

Non-negotiable Examples

Non-negotiable Prices

When a price is stated as non-negotiable, it signifies that it cannot be negotiated down. When one party establishes a non-negotiable price, the first party’s refusal to engage in such a debate essentially eliminates the opportunity to try to negotiate. A homeowner, for example, may refuse to sell their home unless a buyer offers at least $300,000. A bid of $290,000 will be rejected if the individual considers the asking price to be non-negotiable. If an asset is referred to as a registered security in the context of securities, its price cannot be changed. Savings bonds are a good example of this because they have a set face value or par value that cannot be changed.

Non-negotiable Contract Elements

Certain non-negotiable clauses may be included in a contract. A employment offer, for example, can allow for wage negotiation but be firm on other aspects, such as the amount of days an employee can take for yearly leave. Furthermore, in the case of rental property leases, the amount due as payment may be considered non-negotiable.  Rent is established as a fixed price that the renter must deliver to the property owner.  It is not open for negotiation on a month-by-month basis.

Non-negotiable Financial Products

Securities and products that are non-negotiable cannot be transferred from one party to the next. A government savings bond is an example of a non-negotiable instrument, often known as a non-marketable instrument. They can only be redeemed by the bond’s owner, and they can’t be sold to anyone else. These goods, also known as registered securities or non-transferable securities, are referred to as illiquid because they cannot be sold.

Non-negotiable Promissory Note

A promissory note is essentially a written promise to pay someone. This type of document is common in financial services. A promissory note is sometimes known as an IOU, a loan arrangement, or simply a note. It’s a legal document that states that the borrower agrees to repay the lender a specific amount of money within a specific time frame. This type of document is legally binding and obligates the borrower to repay the debt. These notes are non-negotiable once both parties agree to all the terms and conditions as stated withing the body of the note document. A non-negotiable promissory note typically includes:

  • The names and addresses of the lender and borrower
  • The amount of money being borrowed and what, if any, collateral is being used
  • How often payments will be made in and in what amount and when (for example, the first of every month)
  • Signatures of both parties, in order for the note to be enforceable

Up Next: Tax Fugitives – Eight Notorious Tax Evaders

Tax Fugitive

Tax evasion is the avoidance of paying taxes through illegitimate means. Typically, tax evasion techniques involve an individual or organization lying to the Internal Revenue Service about their income. Money laundering penalties may be levied against those who attempt to report their revenues as coming from a legitimate source.  Any of these activities can turn otherwise legitimate businessmen or celebrities into tax fugitives.

Who doesn’t want to save money on their taxes? Tax avoidance is one thing, but income tax evasion is quite another. Tax evasion happens when a person or company employs illegal means to avoid paying taxes.  On the other hand, tax avoidance occurs when a person or company utilizes legal means to reduce the amount of taxes owed. Well-known tax fugitives devised innovative (and unlawful) schemes to avoid paying their debts. Learn how much they owed and how they were apprehended.

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