x What do you need to learn about the content and format of a Promissory Note?
x You are having transactions related to the Promissory Note but do not understand what it is? What function does it have? x Want to know what's the difference between Bill of Exchange and Promissory Note?
Proship.vn will use this sharing article to clarify what the term promissory note is; The functions, tasks and characteristics of the promissory note as well as the contents of the promissory note include, format, etc. for those who have been participating in international trade transactions, payments, issuance Bill of exchange can get the point across.
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What is a Promissory Note? What functions and characteristics does it have?
What is a Promissory note?
What is a Promissory note? Promissory Note is an unconditional commitment to pay by the maker, i.e. the issuer of the bill, promising to pay a certain amount of money at a specific time in the future to the beneficiary or paid to another person at the request of the beneficiary.
Function of Promissory note
In contrast to a bill of exchange, a promissory note is a promise to pay, not a request for payment. With a promissory note, the maker is responsible for paying a specified amount of money to the beneficiary clearly stated on the bill.
In contrast, a bill of exchange is a document in which the drawer wishes to receive a sum of money from another party. The person who issues the bill of exchange is the beneficiary, while the person who makes the bill of exchange has the obligation to make payment according to the commitment made.
Characteristics of promissory notes
Outstanding features of promissory notes:
- The person signing the promissory note will be the issuer;
- A promissory note is an unconditional promise to pay instrument written by the debtor to promise to pay a certain amount of money to the creditor;
- A promissory note is a written commitment to pay. To have legal value and ensure payment, a promissory note needs to be guaranteed by a third party, possibly a bank, committing to make payment when due.
Content and format of Promissory Note
What is the format and content of the promissory note? Specifically:
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- The title is written on the front side "Debt promissory note";
- Promise to pay a certain amount of money unconditionally;
- Payment location;
- The payment term of the promissory note is clearly stated;
- Name for an organization or full name for an individual of the beneficiary designated by the issuer or requesting payment of the promissory note to the beneficiary's order or requesting payment of the bill of exchange to the holder;
- Date and place where the release was signed;
- Name for organization or full name, first name for individual, address and signature of issuer.
The promissory note must fully show the above contents and will be VALID if one of those contents is missing, unless:
- If there is no place of payment on the promissory note, the place of payment is the address of the issuer;
- If the place of issuance is not recorded on the promissory note, the place of issuance is the address of the issuer;
- If there is not enough space to write all the information on the promissory note, an additional sheet may be attached. The attached supplementary sheet will show the content of guarantee, transfer, pledge, and collection. The first person to create a supplementary sheet must attach the supplementary sheet to the promissory note and sign on the intersection between the supplementary sheet and the promissory note.
Payment of the promissory note is considered completed when:
- The issuer has fulfilled its obligation to pay the entire amount stated on the promissory note to the beneficiary;
- The beneficiary cancels the promissory note;
- Or the issuer becomes the beneficiary of the promissory note on the due date or after that date.
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What is the form of debt collection guarantee?
“Article 25. Form of guarantee
1. The guarantee of a bill of exchange is done by the guarantor writing the phrase "guarantee", the guarantee amount, the name, address, signature of the guarantor and the name of the guaranteed on the bill of exchange. debt collection or on the supplementary sheet attached to the debt collection bill.
2. In case the guarantee does not state the name of the person being guaranteed, the guarantee is considered a guarantee for the drawer."
The guarantee of a bill of exchange is carried out by the guarantor writing the prescribed contents on the bill of exchange or on the supplementary sheet attached to the bill of exchange, including:
- The phrase "guarantee":
The bill of exchange drawn may or may not have a guarantee. In case the parties have agreed on the application of guarantee measures, it must be recorded on the bill of exchange.
- Guarantee amount:
The guarantor may undertake to guarantee the entire value of the bill of exchange or only a portion. Therefore, the bill of exchange must clearly state the amount of money that the guarantor commits to guarantee.
- Name, address, signature of the guarantor and name of the guaranteed:
The person who is guaranteed is the person who is drawn upon. On the bill of exchange, the name of the person being guaranteed must be written, ensuring that the donor commits to the guarantee of the guarantor. If the guarantee does not state the name of the person being guaranteed, the guarantee is considered a guarantee for the drawer.
Difference between Bill of Exchange and Promissory Note
What is the difference between Bill of Exchange and Promissory note? Differences between bills of exchange and promissory notes:
- Bill of Exchange is a financial instrument that represents the amount of money that a buyer owes to a seller. Promissory Note is a written document in which the debtor promises the creditor that the amount due will be paid on a specific date in the future;
- Bill of Exchange is defined in Section 5 of the Negotiable Instruments Act, 1881 while Note of Issue is defined in Section 4;
- In a bill of exchange, there are three parties while in the case of forward notes, the number of parties is 2;
- The creditor creates the Bill of Exchange while the Promissory Note is prepared by the debtor;
- The liability of the creator of the bill of exchange is secondary and conditional. On the contrary, the responsibility of the creator of the debit note is primary and absolute;
- Bill of Exchange can be made in copies but Promissory Note cannot be made in sets;
- In the case of a bill of exchange, the drawer and the payee may be the same person which is not possible in the case of a Note of Issuance;
- Notice of dishonesty of a bill of exchange must be given to all parties concerned, however, in the case of promissory notes, such notice need not be given to the manufacturer.
What is a Promissory Note , what is its function, what is different from the Bill of Exchange, what is the form of promissory note guarantee,... are useful knowledge that Proship Logistics wants to convey to relevant parties. timely. If you have any questions, please contact 0909 344 247 for answers and advice on multi-modal shipping solutions at the best prices.
