Professional Documents
Culture Documents
Free Money You Never Knew Existed and Its All Yours
Free Money You Never Knew Existed and Its All Yours
Free Money You Never Knew Existed and Its All Yours
This type of agreement is used when a customer has not paid an amount that was
made available on trade credit, and the creditor now insists on a formal lending
arrangement to improve the odds of repayment. It may also be used with
individuals, so that the seller has a preference debt that is senior to other sellers
who have only extended trade credit to a person. Promise to pay agreements may
be required for payday loans, car loans, and mortgages.
A promissory note, sometimes referred to as a note payable, is a legal instrument (more particularly, a financing
instrument and a debt instrument), in which one party (the maker or issuer) promises in writing to pay a
determinate sum of money to the other (the payee), either at a fixed or determinable future time or on demand of
the payee, under specific terms and conditions.
The term note payable is commonly used in accounting (as distinguished from accounts payable) or commonly
as just a "note", it is internationally defined by the Convention providing a uniform law for bills of exchange and
promissory notes, but regional variations exist. A banknote is frequently referred to as a promissory note, as it is
made by a bank and payable to bearer on demand. Mortgage notes are another prominent example.
A banknote is payable to the bearer on demand, and the amount payable is apparent on the face of the
note. Banknotes are considered legal tender; along with coins, they make up the bearer forms of all modern
money. A banknote is known as a "bill" or a "note."
If the promissory note is unconditional and readily saleable, it is called a negotiable instrument.
Demand promissory notes are notes that do not carry a specific maturity date, but are due on demand of the
lender. Usually the lender will only give the borrower a few days' notice before the payment is due.
Promissory notes may be used in combination with security agreements. For example, a promissory note may
be used in combination with a mortgage, in which case it is called a mortgage note.
In common speech, other terms, such as "loan", "loan agreement", and "loan contract" may be used
interchangeably with "promissory note". The term "loan contract" is often used to describe a contract that is
lengthy and detailed.[3]
A promissory note is very similar to a loan. Each is a legally binding contract to unconditionally repay a specified
amount within a defined time frame. However, a promissory note is generally less detailed and less rigid than a
loan contract.[5] For one thing, loan agreements often require repayment in installments, while promissory notes
typically do not. Furthermore, a loan agreement usually includes the terms for recourse in the case of default,
such as establishing the right to foreclose, while a promissory note does not.
Negotiable instruments are unconditional and impose few to no duties on the issuer or payee other than
payment. In the United States, whether a promissory note is a negotiable instrument can have significant legal
impacts, as only negotiable instruments are subject to Article 3 of the Uniform Commercial Code
and the application of the holder in due course rule.[4] The negotiability of mortgage notes has been debated,
particularly due to the obligations and "baggage" associated with mortgages; however, in mortgages notes are
often determined to be negotiable instruments.[4]
In the United States, the Non-Negotiable Long Form Promissory Note is not required.
Once the promissory note reaches its maturity date, its current holder (the bank) can execute it over the emitter
of the note (the debtor), who would have to pay the bank the amount promised in the note. If the maker fails to
pay, however, the bank retains the right to go to the company that cashed the promissory note in, and demand
payment. In the case of unsecured promissory notes, the lender accepts the promissory note based solely on
the maker's ability to repay; if the maker fails to pay, the lender must honour the debt to the bank. In the case of
a secured promissory note, the lender accepts the promissory note based on the maker's ability to repay, but the
note is secured by a thing of value; if the maker fails to pay and the bank reclaims payment, the lender has the
right to execute the security.
In 1930, under the League of Nations, a Convention providing a uniform law for bills of exchange and
promissory notes was drafted and ratified by eighteen nations.[34][35] Article 75 of the treaty stated that
a promissory note shall contain:
•the term "promissory note" inserted in the body of the instrument and expressed in the language employed in
drawing up the instrument
•an unconditional promise to pay a determinate sum of money;
•a statement of the time of payment;
•a statement of the place where payment is to be made;
•the name of the person to whom or to whose order payment is to be made;
•a statement of the date and of the place where the promissory note is issued;
•the signature of the person who issues the instrument (maker).
A Loan is a form of debt where one party agrees to lend money to another. While generally
synonymous with debt, debt covers any amount owed to another, whereas a loan refers
specifically to an agreement where one party lends to another.
Debt is an obligation that requires one party, the debtor, to pay money or other agreed-upon value to another
party, the creditor.
A debtor or debitor is a legal entity (legal person) that owes a debt to another entity. The entity may be an
individual, a firm, a government, a company or other legal person. The counterparty is called a creditor. When
the counterpart of this debt arrangement is a bank, the debtor is more often referred to as a borrower.