What Is a Promissory Note?

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.

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.