A promissory note is a written promise by one party to pay a stated amount to another party under specified terms. Trade notes may evidence deferred payment and can sometimes be transferred, guaranteed or sold to a finance provider.
How is Promissory Note used?
The maker issues and signs the note, stating the amount, payee, payment date and any agreed interest or conditions. The payee holds the note as evidence of the promise and may be able to transfer it if the wording and governing law permit. Payment, endorsement, amendment and cancellation should remain traceable to the original instrument.
What the file should show
Retain the executed note, parties, amount, currency, interest if any, maturity, governing law, endorsements and payment evidence.
What does Promissory Note not establish?
The note documents a payment obligation but does not prove delivery or remove defenses unless the governing rules provide otherwise.
