A promissory note is an instrument in writing containing an unconditional undertaking signed by the maker, to pay a certain sum of money only to or to the order of a certain person or to the bearer of the instrument.
2. Prepared By
Manu Melwin Joy
Assistant Professor
Ilahia School of Management Studies
Kerala, India.
Phone – 9744551114
Mail – manu_melwinjoy@yahoo.com
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3. Definition
• A promissory note is an
instrument in writing
containing an
unconditional undertaking
signed by the maker, to
pay a certain sum of
money only to or to the
order of a certain person
or to the bearer of the
instrument.
4. Definition
• The person who makes
the promissory note and
promises to pay is called
the maker. The person to
whom the payment is to
be made is called payee.
5. Example
• I acknowledge myself to
be indebted to A in Rs 500
to be paid on demand for
values received.
6. Essentials of a promissory note
1. In writing.
2. Promise to pay must be express.
3. Definite and unconditional.
4. To be signed by the maker.
5. Certain in the case of parties.
6. Certainty in the case of sum of
money.
7. Promise to pay money only.
8. Formalities are not necessary.
7. Essentials of a promissory note
• In writing – Promissory note
must be writing. Writing
may include print, type
writing, writing in pencil or
writing in ink. Writing
includes photographing and
lithographing.
8. Essentials of a promissory note
• Promise to pay must be
express – It must contain an
express undertaking or
promise to pay. A mere
acknowledgement is not
enough.
9. Essentials of a promissory note
• Definite and unconditional –
The promise to may must be
definite and unconditional. A
promise to pay in
unconditional if it depends on
an event which is certain to
happen or if it is to pay at a
particular place or at a
specified time.
– Example – A promise to pay a
sum of Rs 1000 two days after
the death of C.
10. Essentials of a promissory note
• To be signed by the maker –
The promissory note must
be signed by the maker
otherwise it is incomplete.
11. Essentials of a promissory note
• Certain in the case of
parties – The instrument
must point out with
certainty as to who is the
maker and who is the payer.
12. Essentials of a promissory note
• Certainty in the case of sum
of money – The sum
expressed to be payable by
the promissory note must
be certain and must be
capable of contingent
additions or subtractions.
– Example – “I promise to pay
A Rs 500 and all other sum
payable” – Sum of money is
not certain.
13. Essentials of a promissory note
• Promise to pay money only
– The payment must be in
the legal tender money of
India.
– Example – “I promise to pay
A Rs 500 and a quintal of
rice” – Only money is
acceptable.
14. Essentials of a promissory note
• Formalities are not
necessary – Formalities like
number, date, place,
consideration etc are
usually found in an
instrument even though
they are not essential in
law.
