PROMISSORY NOTE

(A brief Introduction)

1. Promissory note 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 the bearer of the instrument.

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.

(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 Ds 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. [Section 4 of the Negotiable Instruments Act, 1881]

2. Essentials of a promissory note.

The promissory note:-

1. must be in writing;

2. must be signed by a maker;

3. must contain an undertaking to pay;

4. must be a promise to pay unconditionally on demand or at a fixed or determinable future time;

5. payee must be certain;

6. maker must be certain;

7. sum payable must be certain;

8. must contain a promise to pay money and money only;

9. must be payable to or to the order of a certain person or to the bearer.

1.Indian Stamp Act, 1899 (Central Act, 2 of 1899) has also defined the word Promissory note. Promissory note means a promissory note as defined by the Negotiable Instruments Act, 1881;

It also includes a note promising the payment of any sum of money out of any particular fund which may or may not be available, or upon any condition or contingency which may or may not be performed or happen;

2. Attestation. A promissory note or Bill of Exchange if attested; for its attestation renders it a Bond liable to stamp duty under Sec. 2(1) (ab) of the Karnataka Stamp Act, 1957. Duty leviable @ rate of 5% as per Article 12 of the Schedule to the Karnataka Stamp Act, 1957.

Note : This is only a draft format and not a format prescribed under any law. This format can be used with modifications suiting to your requirements wherever it is necessary. In case of doubt regarding payment of Stamp duty and Registration fee etc. contact the concerned Sub-Registrar / District Registrar.

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