What is promissory note in simple words?

A promissory note is a financial instrument that contains a written promise by one party (the note’s issuer or maker) to pay another party (the note’s payee) a definite sum of money, either on demand or at a specified future date.

What is promissory note in law?

A Promissory Note is a unique financial instrument which binds the borrowers by law to pay the lender the specified sum of money at a specified date or on demand.

Where is promissory note defined?

A promissory note refers to a financial instrument that includes a written promise from the issuer to pay a second party – the payee – a specific sum of money, either on a specific future date or whenever the payee demands payment (depending on the terms of the note). Promissory notes are debt instruments.

What is a promissory note and what does it symbolize?

: a written promise to pay at a fixed or determinable future time a sum of money to a specified individual or to bearer.

What are the essentials of a promissory note?

A promissory note should have several essential elements, including the amount of the loan, the date by which it is to be paid back, the interest rate, and a record of any collateral that is being used to secure the loan.

Is a promissory note the same as a written contract?

A promissory note is a written promise to pay within a specific time period. This type of document enforces a borrower’s promise to pay back a lender by a specified period of time, and both parties must sign the document. A promissory note is not the same as a contract.

What needs to be in a promissory note?

For a promissory note to be explicit, it needs to include the promise to pay a sum of money, the clarified terms or conditions on repayment, and an absolute date for payment. Amount Payable: Also called the “sum certain” which is the amount that’s compensated to the lender.

What are the characteristics of a promissory note?

Characteristics of Promissory Note It is a written document. There must be a clear and unconditional promise to pay a certain sum to a specified person or on-demand. It must be drawn and duly signed by the maker. It must be properly stamped. It specifies the name of the maker and payee The amount to be paid must be certain, given in both figures and words.