PROMISSORY NOTE

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Promissory notes 

According to negotiable instruments Act 1881, section 4. "A promissory note is an instrument in writing (not being a bank note or a currency note) containing an unconditional undertaking, signed by the maker, to pay a certain sum of money only or to the order of a certain person, or to the bearer of the instrument.”

A promissory note is drawn and signed by the debtor, who promises to pay the creditor a certain sum of money. The specimen of promissory note is given below:                            

      

                                                                                                      NOIDA

RS 8,000                                                                                       5th April, 2019

 

Three months after date i promise to pay Mr. Harun the sum of Rs eight thousand, for value received.

                                                     

                                                                                                    Stamp

To  Mr. Harun                                                                  Sd.    Hasanur Rahman            

A promissory note may be drawn by more than one person also who may undertake to pay the amount both in their individual capacities as well as jointly.

Essential requirements-

1. It must be in writing

2. It must certain a promise or undertaking to pay

3. The promise to pay must be unconditional 

4. It must be signed by the maker

5. The maker must be a certain person

6. The payee must be certain

7. The sum payable must be certain

8. The amount payable must be in legal tender money

Parties to a Promissory Note 

1. Maker. 
He is the person who promises to pay the amount stated in the note. He is the debtor. 
2. Payee. 
He is the person to whom the amount is payable i.e. the creditor. 
3. Holder. 
He is the payee or the person to whom the note might have been indorsed. 
4. The indorser and indorsee (the same as in the case of a bill).  

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