promissory note

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Promissory Note

A written, signed, unconditional promise to pay a certain amount of money on demand at a specified time. A written promise to pay money that is often used as a means to borrow funds or take out a loan.

The individual who promises to pay is the maker, and the person to whom payment is promised is called the payee or holder. If signed by the maker, a promissory note is a negotiable instrument. It contains an unconditional promise to pay a certain sum to the order of a specifically named person or to bearer—that is, to any individual presenting the note. A promissory note can be either payable on demand or at a specific time.

Certain types of promissory notes, such as corporate bonds or retail installment loans, can be sold at a discount—an amount below their face value. The notes can be subsequently redeemed on the date of maturity for the entire face amount or prior to the due date for an amount less than the face value. The purchaser of a discounted promissory note often receives interest in addition to the appreciated difference in the price when the note is held to maturity.

promissory note

n. a written promise by a person (variously called maker, obligor, payor, promisor) to pay a specific amount of money (called "principal") to another (payee, obligee, promisee) usually to include a specified amount of interest on the unpaid principal amount (what he/she owes). The specified time of payment may be written as: a) whenever there is a demand, b) on a specific date, c) in installments with or without the interest included in each installment, d) installments with a final larger amount (balloon payment). A promissory note may contain other terms such as the right of the promisee to order payment be made to another person, penalties for late payments, a provision for attorney's fees and costs if there is a legal action to collect, the right to collect payment in full if the note is secured by real property and the property is sold ("due on sale" clause), and whether the note is secured by a mortgage or deed of trust or a financing statement (a filed security agreement for personal collateral). The promissory note is usually held by the party to whom the money is owed. There are legal limitations to the amount of interest which may be charged. Charging a rate in excess of the legal limit is called "usury," and this excess is legally uncollectible. When the amount due on the note, including interest and penalties (if any) is paid, the note must be cancelled and surrendered to the person(s) who signed it. A promissory note need only be signed and does not require an acknowledgement before a notary public to be valid. (See: interest, obligor, obligee, usury)

promissory note

promissory notes are one species of NEGOTIABLE INSTRUMENT. Section 83 of the BILLS OF EXCHANGE ACT 1882 refers to ‘an unconditional promise in writing made by one person to another, signed by the maker, engaging to pay on demand or at a fixed or determinable future time, a sum certain in money, to or to the order of a specified person or to a bearer.’ A promissory note differs from a bill of exchange in that the maker stands in the place of both the drawer and the acceptor.

PROMISSORY NOTE, contracts. A written promise to pay a certain sum of money, at a future time, unconditionally. 7 Watts & S. 264; 2 Humph. R. 143; 10 Wend. 675; Minor, R. 263; 7 Misso. 42; 2 Cowen, 536; 6 N. H. Rep. 364; 7 Vern. 22. A promissory note differs from a mere acknowledgment of debt, without any promise to pay, as when the debtor gives his creditor an I 0 U. (q.v.) See 2 Yerg. 50; 15 M. & W. 23. But see 2 Humph. 143; 6 Alab. R. 373. In its form it usually contains a promise to pay, at a time therein expressed, a sum of money to a certain person therein named, or to his order, for value received. It is dated and signed by the maker. It is never under seal.
     2. He who makes the promise is called the maker, and he to whom it is made is the payee. Bayley on Bills, 1; 3 Kent, Com, 46.
     3. Although a promissory note, in its original shape, bears no resemblance to a bill of exchange; yet, when indorsed, it is exactly similar to one; for then it is an order by the indorser of the note upon the maker to pay to the indorsee. The indorser is as it were the drawer; the maker, the acceptor; and the indorsee, the payee. 4 Burr. 669; 4 T. R. 148; Burr. 1224.
     4. Most of the rules applicable to bills of exchange, equally affect promissory notes. No particular form is requisite to these instruments; a promise to deliver the money, or to be accountable for it, or that the payee shall have it, is sufficient. Chit. on Bills, 53, 54.
     5. There are two principal qualities essential to the validity of a note; first, that it be payable at all events, not dependent on any contingency; 20 Pick. 132; 22 Pick. 132 nor payable out of any particular fund. 3 J. J. Marsh. 542; 5 Pike, R. 441; 2 Blackf. 48; 1 Bibb, 503; 1 S. M. 393; 3 J. J. Marsh. 170; 3 Pick. R. 541; 4 Hawks, 102; 5 How. S. C. R. 382. And, secondly, it is required that it be for the payment of money only; 10 Serg. & Rawle, 94; 4 Watts, R. 400; 11 Verm. R. 268; and not in bank notes, though it has been held differently in the state of New York. 9 Johns. R. 120; 19 Johns. R. 144.
     6. A promissory note payable to order or bearer passes by indorsement, and although a chose in action, the holder may bring suit on it in his own name. Although a simple contract, a sufficient consideration is implied from the nature of the instrument. Vide 5 Com. Dig. 133, n., 151, 472 Smith on Merc. Law, B. 3, c. 1; 4 B. & Cr. 235 7 D. P. C. 598; 8 D. P. C. 441 1 Car. & Marsh. 16. Vide Bank note; Note; Reissuable note.

References in periodicals archive ?
CPAs should be extremely cautious about entering into an agreement that involves a note payable. This could be a trap, because it fixes the price for consideration and prevents payments that correspond with cash flow.
Under the terms of the deal, which was announced on 30 June, CT Energy will acquire HNR Energia's 51% interest in Harvest-Vinccler Dutch Holding B.V., a Netherlands company, through which all of Harvest's Venezuelan interests are owned, and CT Energy or an affiliate will deliver to Harvest USD 80m in cash, subject to certain adjustments, and a USD 12m six-month 11% note payable by CT Energy or such affiliate.
Under the terms of the agreement, Fred's will acquire EntrustRx and the Reeves-Sain retail pharmacy for approximately USD66m, comprising of USD53m in cash and a USD13m note payable.
Best has concerns over some uncertainties regarding the company s unsettled regulatory issues and the refinancing of TREK s outstanding note payable, due in December 2012.
This revises and refinances the company's USD250m revolving credit facility and replaces a USD25m note payable, both of which were scheduled to mature on 28 September 2012.
The first and simplest way would have been for Hitchins to provide CCC with a written release from liability, along with CMB's issuance of a replacement note payable to Hitchins.
In lieu of immediate payment for the purchase, Virginia Energy issued a promissory note payable to Anthem for USD 3.9m.
The company said that holders of E-xact shares can either elect to receive an immediate payment of CAD0.28 per share, or a payment of CAD0.15 per share with a vendor take back note payable in cash over five years.
Under the terms of the deal, CT Energy will acquire HNR Energia's 51% interest in Harvest-Vinccler Dutch Holding B.V., a Netherlands company, through which all of Harvest's Venezuelan interests are owned, and CT Energy or an affiliate will deliver to Harvest USD 80m in cash, subject to certain adjustments, and a USD 12m six-month 11% note payable by CT Energy or such affiliate.
The net loss in the quarter ended 20 April 2010 included USD149,000 of imputed interest expense due to the amortization of the difference between the face value of the contingent obligation to the former Cortelco shareholders and the discounted present value of the note payable recorded on the balance sheet.
This included USD 119,359 in a short term note payable and USD 515,960 paid via the issuance of 74,776,846 in restricted common stock valued at USD.0069 per share which was the close price on 15 March 2016.
S/W said the purchase price consists of USD 27m in cash (payable at closing), a promissory note payable by SandW to DuPont Pioneer in the principal amount of USD 10m and a potential earn-out payment of up to USD 5m based on sales of the acquired germplasm in the three-year period following the closing.