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    MALKANI DISHA DEEPAK
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    This document defines a promissory note and outlines its 8 essential elements: 1) it must be in writing, 2) contain an express promise to pay, 3) the promise must be unconditional, 4) signed by the maker, 5) the sum must be certain, 6) payable in money only, 7) parties must be certain, and 8) must be stamped. It provides examples of promissory notes and non-promissory notes to illustrate these elements.

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    This document defines a promissory note and outlines its 8 essential elements: 1) it must be in writing, 2) contain an express promise to pay, 3) the promise must be unconditional, 4) signed by the maker, 5) the sum must be certain, 6) payable in money only, 7) parties must be certain, and 8) must be stamped. It provides examples of promissory notes and non-promissory notes to illustrate these elements.

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    42 views10 pages

    Promissory Note

    Uploaded by

    MALKANI DISHA DEEPAK
    This document defines a promissory note and outlines its 8 essential elements: 1) it must be in writing, 2) contain an express promise to pay, 3) the promise must be unconditional, 4) signed by the maker, 5) the sum must be certain, 6) payable in money only, 7) parties must be certain, and 8) must be stamped. It provides examples of promissory notes and non-promissory notes to illustrate these elements.

    Copyright:

    © All Rights Reserved
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    of 10

    PROMISSORY NOTE

    DEFINITION
     A “promissory note” is an instrument in writing
    (not being a bank-note 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.
    ESSENTIALS OF PROMISSORY NOTE
    1. In writing
    The first essential is that all negotiable instruments must be in writing.
    An oral agreement to pay a certain sum of money is not an instrument.
    2. An undertaking to pay
    The second essential element of a promissory note is an express promise
    to pay. A mere acknowledgment or receipt of indebtedness without an
    express promise to pay the debt is not a promissory notice.
    Ex: “Mr. X, I.O.U. (I owe you) Rs. 5000.”
    In Laxmi Bai v. Raghunath, AIR 1929 Bom. 373, it has been held that it
    is simply acknowledgment of debt without promise to pay, hence is not a
    promissory note.
    CONT….
    3. Unconditional promise or undertaking to pay
    A promise is unconditional when it is not subject to any condition. If A
    promises to pay B Rs. 5000 if B marries C. This is conditional promise
    because it is not certain that B will marry C or B or C dies before
    marriage.
    4. Signed by the maker
    The promissory note must be signed by the maker and without signature
    of the maker the instrument is incomplete and of no effect. Where the
    maker of a note, drawer of a bill or cheque or an endorser unable to write
    his name he may sign by a mark.
    The promissory note should be signed by all of joint promisors except in
    case of partners. An agent may also sign provided there should be an
    authority to sign. In case of unauthorized signature of an agent principal
    may ratify. Where maker is an illiterate his thumb impression will suffice.
    CONT….

    5. The sum must be certain


    The sum expressed to be payable by the instrument
    must be certain and not susceptible of contingent
    additions or subtractions.
    6. Money only
    Sixthly, the instrument must be payable in money and
    money only. Where the instrument contains a promise
    to pay something other than money or something in
    addition to money it will not be a promissory note.
    CONT….
    7. Parties must be certain
    Seventhly, the parties to the instrument must be designated with
    reasonable certainty i.e., parties to the instrument must be
    certain. There are two parties to a promissory note, namely, the
    maker who makes the note and the payee to whom the promise is
    made
    8. Must be stamped
    The last requirement of the promissory note is that it must be
    duly stamped.
    In M/s. Packing Paper Sales v. Beena Lata Khosla, AIR 2007
    Del. 175, the Delhi High Court was of opinion that a promissory
    note can be made lawful by paying required stamp with penalty.
    SPECIMEN OF PROMISSORY NOTE

    Rs. 5000.00
    Gorakhpur
    Nov. 15, 2008

    Three months after date, I promise to pay to B. or bearer ……….


    the sum of Rs. Five Thousand for value received.

    A (signature of maker)
    ILLUSTRATIONS
     A signs instruments in the following terms:-
    (a). “I promise to pay B or order Rs. 500.”
    (b). “I acknowledge myself to be indebted to B in
    Rs. 1,000, to be paid on demand , for value
    received.”
    (c). “Mr. B I.O.U. Rs. 1,000.”
    (d). “I promise to pay B Rs. 500 and all other sums
    which shall be due to him.”
    CONT….
    (e). “I promise to pay B Rs. 500 first deducting there out any money
    which he may owe me.”
    (f). “I promise to pay B Rs. 500 seven days after my marriage with C.”
    (g). “I promise to pay B Rs. 500 on D’s death, provided D leaves me
    enough to pay that sum.”
    (h). “I promise to pay B Rs. 500 and to deliver to him my black horse on
    1st January next.”

    The instruments respectively marked (a) and (b) are promissory


    notes. The instruments respectively marked (c), (d), (e), (f), (g) and
    (h) are not promissory notes.

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