Promissory Note :-It is an unconditional written promise by one person to another in which the maker (Payer) promises to pay on demand on any future date, a stated sum of money to the specified person or to the bearer of the instrument.
1. Written :-
The promise to pay must be in writing. Oral promise will not be considered.
2. Maker's Signature :-
Promissory note must be signed by the maker or payer.
3. Unconditional :-
The promise to pay must be unconditional. If it contains a conditional promise, it is not a valid.
Example :- I promise to B one lac after the death of A.
4. Definite Sum of Money :-
The amount to be paid must be definite in terms of money, for example I promise to pay one thousand two hundred and fifty paisa 1200/50 only.
5. Time Decision :-
The promissory note must be payable on demand or at a fixed determinable future date.
6. Payee To be Certain :-
The promissory note must be payable to the bearer or to specified person.
Example :- A promissory note payable to the principal of the college is regarded as payable to certain person.
7. Parties Involved :-
There are two parties involved in the promissory note, the maker and the payee. The promissory note may differ in maturity. Some promissory note mature after a long period, some after a year or month and some are payable on demand. A promissory note can be divided into two categories :
1. Secured.
2. Unsecured.
8. Important Point :-
1. The promise to pay must be lawful.
2. The pro-note must be properly stamped.
3. The stamps must be cancelled.
4. The date must be mentioned.
5. The place must be stated where it is made.
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