There are various negotiable instruments used in business. Examples include bank cheques, bills of exchange and I Owe You documents. A loan promissory note is also an example. It is a document that the debtor uses to acknowledge that he or she owes a certain person a specific amount of money and promises to pay at a later date or on demand. loan promissory note
Negotiable instruments are those that act as a guarantee for ensuring that money owed is paid either on demand or at an agreed future date. This means that the money owed can be paid to the creditor when he or she wants it or at a date that had been agreed earlier. A bank cheque is an example.
There are two parties involved. They are the payee and the issuer. The issuer is the person or institution who owes the payee money. The payee is the person or institution that lends the money. Money is paid to the payee. The document is therefore used by the maker to acknowledge the existence of a debt. The maker uses it to promise to pay the amount owed at a specified time in future or on demand by the payee.
The document binds the parties involved like a formal contract. Therefore a court of Law in any jurisdiction acknowledges it. The maker can be sued if he or she defaults in making the payment when due.
This document can even be made by financial institutions like banks. The bank in this case will be the issuer. They can be used in place of cash in certain cases. The payee pays a third party using it.
A loan promissory note can be a substitute for cash. It is just like a cheque that most people are familiar with. The payee however should determine the credibility of the maker.
Negotiable instruments are those that act as a guarantee for ensuring that money owed is paid either on demand or at an agreed future date. This means that the money owed can be paid to the creditor when he or she wants it or at a date that had been agreed earlier. A bank cheque is an example.
There are two parties involved. They are the payee and the issuer. The issuer is the person or institution who owes the payee money. The payee is the person or institution that lends the money. Money is paid to the payee. The document is therefore used by the maker to acknowledge the existence of a debt. The maker uses it to promise to pay the amount owed at a specified time in future or on demand by the payee.
The document binds the parties involved like a formal contract. Therefore a court of Law in any jurisdiction acknowledges it. The maker can be sued if he or she defaults in making the payment when due.
This document can even be made by financial institutions like banks. The bank in this case will be the issuer. They can be used in place of cash in certain cases. The payee pays a third party using it.
A loan promissory note can be a substitute for cash. It is just like a cheque that most people are familiar with. The payee however should determine the credibility of the maker.
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