Summarize and paraphrase the following:

Chapter 2 - Credit Instruments . Chapter Outcomes/Objectives: Know the nature, importance and advantages of credit instrument, Define what is credit instrument, and Identify the classification of credit instruments as well as the different instruments Chapter Discussion Nature of Credit Instruments le A credit instrument becomes the evidence that there exists a credit transaction Therefore, it starts after the credit of the borrower has been accepted by the creditor Generally, credit instruments are in written form. The reduction of the oral contract into a written agreement is one of the developments of modern-day credit usage However, the contract may also be an oral agreement evidencing the existence of a credit transaction Nevertheless, a written agreement seems more advantageous as we shall Intersee Acredit instrument has two specific characteristics, namely 1. The presence of risk involved which is due to the fact that payment is postponed to a future date, and 2. The stress on the debtor creditor relationship Importance and Advantages There are obvious advantages attached to a credit instrument which is in written form in a written contract, the parties can stipulate the details of the transaction clearly and definitively. Hence, the obligation of the debtor is set in unmistakable terms and the rights of the creditor are likewise spelled out. The rate of interest charged is also cited in the contract so that if any dispute or misunderstanding occurs, the parties merely have to produce the written instrument and settlement can be reached on the basis of the terms and condition appearing therein Credit instruments can be transferred to third parties, the creditor can monctive the credit. This is done through the process of negotiation. In an oral agreement, this would not be possible as the creditor will have to wait for payment at maturity from the borrower In cases of court litigation, the creditor is armed with an incontestable proof and is thus given a legal leg to stand on In a verbal agreement, judgment might be meted out in favour of the creditor or debtor perhaps based on their character or influence Credit Instrument These are promises or orders to pay, a definite or determinable sum of money to bearer or order, on demand or at a future specified time. This document gives evidence to a credit obligation resulting from the past transactions which sets forth the responsibility of the debtor to his creditor. These instruments have four characteristics payable to bearer (when the instrument does not specify the payee's name) payable to order (when the instrument specifies the payee's name) payable on