Question:-What do you mean by ‘promissory note’? State the requisites of a promissory note with the help of some illustrations.

Answer: - Promissory instrument 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.

Requisites of promissory note:

v A promissory not must be in writing, duly signed by its maker and properly stamped as per the Indian Stamp Act.

v It must contain an unconditional undertaking or promise to pay. Mere acknowledgment of indebtedness is not enough.

Example: If someone writes ‘I owe Rs. 5,000 to Satya Prakash, it is not a promissory note.

v It must contain a promise to pay money only.

Example: If someone writes ‘I promise to give Suresh a Maruti car it is not a promissory note.

v The parties (i.e. maker & payee) to a promissory not must be certain.

v A promissory note may be payable on demand or after a certain date. Example: If it is written “three months after date I promise to pay Satinder or order a sum of rupees Five Thousand only” is a promissory note.

v The sum payable mentioned must be certain or capable of being made certain.

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