Does The Promissory Note Provide Security For The Payment?

Yes the promissory note provides security of payment. A promissory note is the simplest and earliest kind of credit instrument. It is an unconditional written promise by one person to another in which the maker promises to pay on demand or to the order of a specified person or to the bearer of the instrument. A promissory note in order to be negotiable must fulfill some conditions.

The promise to pay must be in written form. The promise to pay must be signed by the maker or payer. The promise to pay must be unconditional. An instrument containing a promise to pay q sum after deducting necessary expenses or imposing any other condition is not a promissory note. The amount to be paid must be definite in terms of money. The promissory note must be payable on demand or at a fixed or determinable future date.

The promissory note must be payable to a definite person. The payee must be certain the promissory not can not be made payable to the maker himself. It must bear stamp at the rate prescribed by law of country. There are two parties to a promissory note. The advantage of the promissory note is easy and simple method of borrowing and repaying a debt.