Essentials Characteristics of a Promissory Note

Essentials Characteristics of a Promissory Note

1. Writing: – Promissory note must be in writing. Writing includes print and typewriting. Oral promise can not

Constitute a valid promissory note. Generally consideration, Place and date of making need not be mentioned on the promissory note.

2.     Promise to pay:-

(a)              A Promissory note must contain an undertaking/

Promise to pay.

(b)             Mere acknowledgment of debt is not sufficient.

(c)              Use of word “promise’’ is not mandatory, but the maker should bind himself to pay.

EX.:- “I have received a sum of Rs. 5,000 from Sohan. This amount will be repaid on demand’’.

3.     Unconditional promise:-

(a)              The undertaking/ promise to pay should be unconditional and definite.

(b)             Unconditional event means an event which is certain to happen but the time of its occurrence is uncertain.

Examples:- “I promise to pay B Rs. 500, seven days after may marriage with C’’ cannot constitute a promissory note because a condition as to marriage is attached. A writes – “I promise to pay

C Rs. 25,000, 7days after the death of B’’. This is a valid promissory note and is not conditional, since only the time of death of B is uncertain, but is sure to happen.

1. Signed by the maker:-Promissory note should be signed by the maker himself. Where it is written and the name of the maker appears in the instrument, but is not signed, it shall not constitute a valid promissory note.
2. Payee to be a certain person: – Promissory note should specify the payee in clear terms i.e. by name, son of, and resident of, etc. The payment can also be identified by description.
3. Certain some of money:- Sum payable must be certain or capable of being made certain. The sum shall be deemed to be certain when the rate of interest is specified. Money may be payable in installments is also a valid promissory note.

Examples:- “I promise to pay Balu, Rs. 10,000, and all other sums which shall be due’’ is not valid since the sum is not certain.

Payment of Money only:- There must be a promise to pay only money and not other consideration, e.g. “I promise to pay B a sum of Rs. 50,000 and deliver him my Scorpio Car’’ is not valid.

Duly stamped and dated:- Stamps of requisite amount and description must be affixed on the instrument and duly cancelled either before or at the time of its execution. If the promissory note is not dated, it is presumed to have been made on the date of its delivery.