What is utilized in negotiable instruments as a form of promise to pay?

The correct answer is commercial paper. Commercial paper serves as a written, negotiable instrument used primarily by businesses to raise short-term funding. It represents an unconditional promise to pay a specific amount of money at a set date, making it a key tool in commercial finance.

In terms of its functionality, commercial paper is characterized by its ability to be easily transferred and bought and sold in the market, facilitating liquidity for issuers. This makes it essential for financial businesses and corporations looking to manage cash flow efficiently.

While checks and credit cards are also forms of payment instruments, they operate differently. A check is a direct order from one person to a bank to pay a specified sum from the issuer’s account, while a credit card allows users to borrow money, with an obligation to repay later, rather than a direct promise to pay upon presentation like commercial paper. Cash is a tangible form of payment but does not encapsulate the negotiable contract element inherent in commercial paper. Thus, commercial paper fits the definition of a promise to pay within the context of negotiable instruments.