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Features of Promissory Note

Promissory Note definition A promissory note is a negotiable instrument in writing including an unrestricted task, duly signed by the creator to reimburse a definite amount of money to the ordered individual or to a certain individual or to the carrier of the negotiable instrument.

Features of Promissory Note

Promissory Note definition

A promissory note is a negotiable instrument in writing including an unrestricted task, duly signed by the creator to reimburse a definite amount of money to the ordered individual or to a certain individual or to the carrier of the negotiable instrument.

The conditions of a note more often than not consist of the payable amount, the rate of interest if any, the date, the parties, the repayment terms (which can take in interest) and the date of maturity. Every now and then, conditions are incorporated relating to the payee's rights in the incident of a non-payment, which might consist of foreclosure of the creator's assets. Demand promissory notes are negotiable instrument that do not bear an exact date of maturity, but are payable on requirement of the lender. Typically the lender will merely bestow the borrower a short notice prior to the due date. For loans amid persons, writing as well as signing a note is frequently influential for record and tax keeping.

Features of Promissory Note

According to the definition the important features of the Promissory Note which must be fulfilled in order to make a Promissory Note valid are:

1. The instrument must be in writing. It cannot be verbal.

2. It must be signed by a maker who must be a certain and definite person. A rubber stamp signature or even a signature in pencil which is erasable is valid. An agent can also sign a Promissory Note on behalf of the firm having the authority.

3. It must contain an unrestricted promise to reimburse a definite amount of money only. The amount of money must be certain and definite.

4. The promise must be expressed. It can’t be implied.

5. The Promissory Note must to be paid on demand or at a set future date.

6. It must be payable to a specific person or to the ordered person. The payee must be certain.

7. The promissory note may be made by two or more persons who may be liable to pay the certain amount jointly.

8. It must be stamped according to the Indian Stamp Act.

9. The medium of payment must be in the legal tender money of India.

 

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