What is Promissory Note, its kinds and essential elements:

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What is Promissory Note, its kinds and essential elements:

Unread postby Admin » Thu Sep 27, 2012 11:07 am

What is Promissory Note, its kinds and essential elements:
Under section 2(K) of Limitation Act, 1963 says: Promissory note mean any instrument the maker engages absoutley to pay a specified sum of money to another at a time therein limited or on demand or at sight.
Under section 4 of Negotiable Instrument Act 1881 promissory note is an instruments in writing ( not being a bank note or a currency note) containing an unconditional understanding signed by the maker to pay a certain sum of money only to, to the other of, a certain person or the bearer of the instrument.

Kinds of Promissory Note
(a) A note payable to a certain person
(b) A note payable to the order of a certain person
(c) A note payable to the bearer (not on demand but after dates or a sight or after a certain event )

Essential Elements of Promissory Note
(a) The promissory note which is an instrument must be in writing.
(b) The instruments must contain a promise to pay on demand or at the fixed or determinable future time.
(c) The promise must be an unconditional one
(d) The instrument must be signed by the maker of the instrument
(e) The maker of the writer of the instrument must be a certain person
(f) The promise must be to pay a certain sum of money if there is any addition or deduction that must be a define amount and not indefinite
(g) The promise must be to pay the principal amount and not merely the interest of the amount
(h) The sum payable must be in money only and not in the shape of food gain or animal
(i) The person to revce4ive the money must be certain person
(j) The instrument must be made payable to certain person or to the other of certain person or to the bearer of the instrument itself.
(k) The instrument must not be a bank note or a currency note or prize bond
(l) Place date and time of payments would b e mentioned but they are not the essentials of it
(m) The promise to pay must but depend upon the happening of certain event
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