Promissory Note and Its Essential Elements

Promissory Note and Its Essential Elements. Promissory Note (Pro-Note or Hand Note):

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 order of a certain person, or the bearer of the instrument. Sec. 4.

Promissory Note and Its Essential Elements.

The person who makes the promise is called the maker. He is the debtor and must sign the instrument. The person who will get the money is called the payee. 

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 order of a certain person, or the bearer of the instrument. Sec. 4.

The person who makes the promise is called the maker. He is the debtor and must sign the instrument. The person who will get the money is called the payee. 

Essential Elements: 

1. The instrument must be in writing. 
2. The maker of it must sign the instrument. A signature in pencil or by a rubber stamp or facsimile is good. An illiterate person may use a mark or cross instead of writing out his name. The mark or signature may be placed anywhere on the instrument, not necessarily at the bottom. It may be at the top or at the back of the instrument.
3. The instrument must contain a promise to pay. The promise to pay must be expressed. It can not be implied or inferred. A mere acknowledgment of indebtedness is not enough. 
4. The promise must be unconditional. If the promise to pay is coupled with a condition, it is not a promissory note. 
5. The maker of the instrument must be certain and definite.
6. A promissory note must be stamped according to the Stamp Act.
7. The sum of money to be paid must be certain
8. The payment must be in the legal tender money. A promise to pay a certain quantity of goods or a certain amount of foreign money is not a promissory note. 
9. The money must be payable to a definite person or according to his order. A note is valid even if the payee is misnamed or is indicated by his official designation only. 
10. The promissory note may be payable on demand or after a certain definite period of time. 

Specimen of Promissory Notes:

An instrument is valid as a promissory note if it is so drafted as to satisfy the essential requirements of a promissory note. Some typical specimens are given below:

On-demand I promise to pay A, B of 23 College street or order taka 500000  ( taka five lacs only) with interest at  10 percent per annum, for value received in cash. Signed X, Y

Date………….

Address……………….

One year after the date I promise to pay C, D or order taka 100000.

Date………………

Address…………….

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