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Negotiable instruments
Negotiable instruments are essential tools in most of the financial transactions. They include cheques, bank notes, promissory notes, bill of exchanges and many others. According to the scenario, there are different situations under which Mary’s company can use negotiable instruments. The situation under which Mary allows his customers to pay for the equipment over the time of the maintenance plan need some negotiable tools to be used. A negotiable instrument like the promissory note can be used to serve as a promise that that particular amount of money shall be paid on demand to the company.
The second situation under which Mary’s company may need to use promissory notes is when borrowing for a loan that facilitates the equipment. Different negotiable instruments can be used to facilitate the borrowing of the money. A bill of exchange can be employed addressed to Mary’s company from the borrower, requiring the company to pay on demand at a future date. Finally, the customer is given three years to pay for the equipment. This is also a form of borrowing, and so there should be a negotiable instrument used such as the bank notes to serve as a promise that they will make payments.
There are various risks associated with the negotiable instruments. Some of the risks include the restriction placed on the by transfer by one person or and another. There may also be small funds available when the negotiable instruments are used. Another risk involved is that one can find the misplaced promissory note forge the signature of the lender and present forged identification paper. The person with the forged identification can show himself as if he obtained the documents legally and in this case, defraud the real owner. Some other negotiable instruments can be dishonored before they mature. This causes inconveniences when making payments through the cheques.
References
Nethery, K. (2000). U.S. Patent No. 6,070,798. Washington, DC: U.S. Patent and Trademark
Office.
Tsakanikas, P. J. (1996). U.S. Patent No. 5,570,465. Washington, DC: U.S. Patent and
Trademark Office.