MEANING AND FEATURES OF PROMISSORY NOTE

Ø  PROMISSORY NOTES          
 NEGOTIABLE INSTRUMENTS
BUSINESS LAW 2

Ø  SHASHI AGGARWAL ECONOMICS AND LAW CLASSES

Ø  MEANING

   SEC 4 OF THE NEGOTIABLE INSTRUMENT ACT DEFINES A PROMISSORY NOTE ,” :-

1.       AN INSTRUMENT IN WRITING( NOT BEING A BANK NOTE OR CURRENCY NOTE)

2.       CONTAINING AN UNCONDITIONAL UNDERTAKING SIGNED BY THE MAKER

3.       TO PAY A CERTAIN SUM OF MONEY ONLY TO

4.       OR TO THE ORDER OF, CERTAIN PERSON OR TO THE BEARER OF THE INSTRUMENT.

   EXAMPLE

1.       I PROMISE TO PAY SUNIL OR ORDER RS 1000

2.       MR.TI.O.U RS 1500

3.       I ACKNOWLEDGE MYSELF TO BE INDEBTED TO C IN RS 1500 TO BE PAID ON DEMAND FOR VALUE RECEIVED

4.       I PROMISE TO PAY RS 700 AND ALL OTHER SUMS WHICH SHALL BE DUE TO HIM

5.       I PROMISE TO PAY RS 500 AFTER EIGHT DAYS MY DAUGHTER’S MARRIAGE

   SPECIMEN COPY

                                                     BATHINDA

                                                       9/2/19

THREE MONTH AFTER DATE, I PROMISE TO PAY MR. KIRTI MENON OR ORDER RS 20,000 ( TWENTY THOUSAND) WITH INTEREST 10 PERCENT PER ANNUM FOR VALUE RECEIVED.  

                                                 SIGNATURE  ANAND                             STAMP

   ESSENTIALS OF A PROMISSORY NOTE

1.       IN WRITTEN : MUST BE IN WRITTEN FORM. WRITING INCLUDES PRINT AND TYPEWRITING. MAY ALSO BE IN PENCIL OR INK

2.       TO PAY MUST BE EXPRESS:-MUST CONTAIN AN EXPRESS PROMISE TO PAY. A MERELY ACKNOWLEDGEMENT OR IMPLIED UNDERTAKING IS NOT SUFFICIENT.

3.       MUST BE UNCONDITIONAL:THE PROMISE TO PAY MUST BE DEFINITE AND UNCONDITIONAL. I PROMISE TO PAY RS 500 WHEN CONVENIENT OR ABLE IS INVALID

4.       MUST BE SIGNED BY THE MAKER:MUST BE SIGNED BY THE MAKER

5.       MAKER MUST BE CERTAIN:

Ø  ESSENTIAL OF A PROMISSORY NOTE

1.       TO PAY A CERTAIN SUM:-THE SUM PAYABLE MUST BE CERTAIN AND MUST NOT BE CAPABLE OF CONTINGENT CONDITIONS OR SUBTRACTIONS

2.       TO PAY MONEY ONLY: MUST BE IN THE LEGAL TENDER OF INDIA

3.       THE PAYEE MUST BE CERTAIN:-

4.       DELIVERED TO THE PAYEE

5.       PAYABLE ON DEMAND OR AFTER A DEFINITE PERIOD OF TIME

6.       OTHER FORMALITIES

   PARTIES

1.       THE MAKER: THE PERSON WHO MAKES PROMISSORY NOTE

2.       THE PAYEE:-THE PERSON WHO IS NAMED IN PROMISSORY NOTE TO WHOM THE PAYMENT IS TO BE MADE

3.       THE HOLDER:-THE HOLDER OF PROMISSORY NOTE MEANS ANY PERSON ENTITLED IN HIS OWN NAME TO THE POSSESSION AND RECEIVE AND RECOVER THE AMOUNT

4.       THE ENDORSER:-THE PERSON WHO ENDORSER

5.       ENDORSEE:-TO WHOM THE ENDORSEMENT IS MADE