Are you looking for promissory note definition and the essential features of promissory note? You are on the right spot to know the answer of this question.
As already stated that a negotiable instrument means a promissory note, bill of exchange or cheques payable either to order or to the bearer, so from this definition, we find that there are three types of negotiable instruments and they are:
- Promissory Note
- Bill of exchange
- Cheque
Promissory Note Definition
“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 on demand or at a fixed or determinable future time a certain sum of money only or to the order of a certain person, or to the bearer of the instrument” Sec 4.
According to the above-mentioned section, we find that it is an unconditional promise in writing by one person (maker) to another person (payee), where the maker promises to pay a certain sum of money on demand or at a predetermined future come to a certain person or to his order or to the bearer (who holds the instrument).
Essential Features of Promissory Note
The essential elements of promissory notes are as follows:
IN WRITING
A promissory note must be in writing. It cannot be verbal promise to pay or in any other way.
PROMISE TO PAY
It is a promise to pay it cannot be an order or request for the payment of money
UNCONDITIONAL PROMISE
A promissory note contains an unconditional promise to pay.
SIGNED BY THE MAKER
This document must be signed by the maker. If it is not signed by the maker it cannot become a promissory note. If the maker cannot sign he can put his thumb mark.
FIXED AMOUNT
The amount of a promissory note is fixed and certain. A document containing the words” l promise to pay B a sum of money which shall be due to him” is not a promissory note.
PAYABLE IN MONEY
The amount of promissory note is payable in money and money only. It cannot be paid in goods or something else.
PAYMENT PERIOD
The promissory note is payable on demand or at some determinable future time.
MAKER MUST BE CERTAIN PERSON
The maker must be a certain person. The maker may be one or more persons. When promisors are more than one, they may find themselves jointly or jointly and severally.
PAYEE MUST BE CERTAIN
A promissory note must be payable to a certain person whose name is written on the document or to his order. If it is endorsed by him, it becomes payable to the bearer. It cannot be payable to the maker of the note himself.
PLACE AND DATE
The place and date of issue are usually given on the instrument, but they are not essential in the eyes of law.
Specimen of a Promissory Note
Rss Bahawalpur
Jan. 1, 2020.
Three months after date. I promise to pay M. Saeed Khan or order Sum of rupees one thousand, for value received.
Stamp
Saeed Khan
Principal G.C.C. Multan Sd/- N.K. Niazi
