The Sec. four of the negotiable instruments deed defines a Promissory Note equally an Instrument inward writing (not existence a depository fiscal establishment authorities notation or a currency note) containing an unconditional undertaking, signed past times the maker, to pay a sure enough total of coin solely to or to the social club of a sure enough someone or to the bearer of the instrument.
The someone who makes promissory authorities notation in addition to promises toon e pers pay is called the maker in addition to the someone to whom the amount is payable is called the payee. It is e’er drawn past times the debtor inward favour of creditor. A promissory authorities notation must endure inward writing, containing an unconditional hope to pay a sure enough coin to a sure enough person. It must endure duly stamped. Below is the specimen of a Promissory Note.
Essential Characteristics of a Promissory Note :
- Writing : The promissory authorities notation to endure valid must endure inward writing. Oral hope to pay sure enough total later about fourth dimension is non called a promissory note. It may endure inward whatsoever shape written or printed.
- Promise to Pay : The promissory authorities notation to endure valid must comprise limited project or hope to pay sure enough amount on sure enough date. A mere accepting of a debt is non promissory note. A valid promissory authorities notation must comprise the next sentence.
Unconditional Undertaking : The hope to must endure unconditional, absolute in addition to should non depend on happening or non happening an event. For example, the document contains a sentence. “I hope to pay equally shortly equally possible a total of Rs. 10,000. It cannot endure identified equally promissory authorities notation such premisses volition create dubiousness of payment in addition to thus it is non a promise.Signed past times the Maker : The promissory authorities notation to endure valid must endure signed past times the debtor who makes it. It tin endure signed past times the agent also, but the Agent must specify that he is signing on behalf of a debtor otherwise he volition endure personally liable.The maker Must endure Certain : The promissory authorities notation must demonstrate clearly who is the someone project to pay the amount. Maker is taken equally sure enough if from the description of the maker, sufficient indication follows close his identity.Payable to a Certain Person : The payee must endure certain. the musical instrument must position alongside certainty to whom the amount is payable. The payee may endure ascertained either past times elevate or designation. The promissory authorities notation is payable solely to sure enough someone named or identified but non to a bearer on demand. Promise to Pay Money in addition to Money Only : The promissory authorities notation should comprise a sure enough total of legal tender coin solely but non goods. A hope to deliver goods either inward the option or improver to coin does non found a promissory note. Amount Payable Must endure Certain : The amount payable on promissory authorities notation must endure sure enough in addition to definite. According to Sec. five of the Negotiable Instruments Act, the total payable may endure certain, inspite of the fact that,
- “I Promise to pay X on social club Rs. _______________/- “
Delivery Essential : The promissory authorities notation is to endure delivered to creditor past times the debtor. Unless it is delivered, it does non found equally a promissory note.Other Formalities : The other formalities regarding number, place, appointment consideration etc. though commonly essential but non essential inward law. But the promissory authorities notation must endure properly stamped equally required past times the Indian Stamps Act.
- it includes hereafter interest, or
- it is payable at an indicated charge per unit of measurement of exchange, or
- it is payable according to the course of teaching of exchange.