A promissory note is an unconditional promise in writing given by the buyer (or creditor) to the seller (or debtor) to pay the amount of money specified therein to the seller or to the order of seller or to bearer. As per the Negotiable Instrument Act, 1881, “A promissory note is an instrument in writing (not being a banknote or a currency note) 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”. For Example, Shri Amal sold goods to Shri Ram worth Rs 10,000 on July 12, 2013. On the same day, Shri Ram drew a promissory note of Rs 10,000 to be paid 3 months after the date. Below is a representative format of the bill. Features of Promissory Note are
Features of Promissory Note
- It is an unconditional promise in writing.
- It is a promise to a pay Specified Amount on demand or at a determinable future date.
- It pays amount to the personwhose name is specified (Payee) or to his order (Endorsee) or to bearer.
- It is drawn as well assigned by maker.
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