When it comes to legal agreements, there are often many clauses and stipulations that can make the language seem complex and confusing. One term that you may come across is the phrase “subject to” or “governed by.” This term is often used to refer to an instrument that is subject to or governed by another agreement. But what does this mean exactly, and is such an instrument negotiable?
First, let`s define what we mean by an “instrument.” In legal terms, an instrument is any document that creates a legal obligation between two or more parties. Examples of instruments include contracts, deeds, and promissory notes.
When an instrument is subject to or governed by another agreement, it means that the terms of the instrument are regulated by the provisions of the other agreement. This other agreement is typically referred to as the “master agreement” or the “governing agreement.”
For example, let`s say that you want to enter into a loan agreement with a bank. The loan agreement that you sign may state that it is subject to or governed by a larger agreement between the bank and a group of lenders. This larger agreement would outline the terms and conditions of the loan, such as the interest rate, repayment schedule, and any penalties for defaulting on the loan.
So, is an instrument that is subject to or governed by another agreement negotiable? The answer is that it depends on the specific terms of the agreement. In some cases, the instrument may be fully negotiable and can be freely transferred from one party to another. However, in other cases, the instrument may be non-negotiable or may only be transferable under certain conditions.
In general, if an instrument is subject to or governed by another agreement, the terms of that agreement will take precedence over the terms of the instrument itself. This means that any negotiation or transfer of the instrument will need to comply with the provisions of the governing agreement.
As a professional, it is important to understand the nuances of legal language and how it impacts the negotiability of instruments. By having a clear understanding of these concepts, you can ensure that your articles are accurate and informative for readers.