What Is a Promissory Note?

Business & Management
#1

A promissory note is a financial document that contains a written commitment by one party (the note’s issuer or maker) to pay another party (the note’s payee) a certain amount of money, either immediately or at a later date. A promissory note usually includes all of the details of the obligation, such as the principal amount, interest rate, maturity date, and date and location of issue, and issuer’s signature.

#2

Promissory is a legal instrument in writing ( not currency note or bank note) contains an unconditional undertaking, signed by maker to pay certain amount of money, only to bearer of the instrument. It is defined under section 4 of negotiable instrument Act of 1981.

For example, A is buyer and he wants some good from seller B. Buyer A doesn’t have money to pay seller B so he give a promissory note to seller B that he will pay his money in future , then seller B gives goods to buyer.