Skip to main content
Select Source:

Promissory Note

PROMISSORY NOTE

A written, signed, unconditional promise to pay a certain amount of money on demand at a specified time. A written promise to pay money that is often used as a means to borrow funds or take out a loan.

The individual who promises to pay is the maker, and the person to whom payment is promised is called the payee or holder. If signed by the maker, a promissory note is a negotiable instrument. It contains an unconditional promise to pay a certain sum to the order of a specifically named person or to bearer—that is, to any individual presenting the note. A promissory note can be either payable on demand or at a specific time.

Certain types of promissory notes, such as corporate bonds or retail installment loans, can be sold at a discount—an amount below their face value. The notes can be subsequently redeemed on the date of maturity for the entire face amount or prior to the due date for an amount less than the face value. The purchaser of a discounted promissory note often receives interest in addition to the appreciated difference in the price when the note is held to maturity.

Cite this article
Pick a style below, and copy the text for your bibliography.

  • MLA
  • Chicago
  • APA

"Promissory Note." West's Encyclopedia of American Law. . Encyclopedia.com. 16 Aug. 2017 <http://www.encyclopedia.com>.

"Promissory Note." West's Encyclopedia of American Law. . Encyclopedia.com. (August 16, 2017). http://www.encyclopedia.com/law/encyclopedias-almanacs-transcripts-and-maps/promissory-note

"Promissory Note." West's Encyclopedia of American Law. . Retrieved August 16, 2017 from Encyclopedia.com: http://www.encyclopedia.com/law/encyclopedias-almanacs-transcripts-and-maps/promissory-note

promissory note

promissory note, unconditional written promise to pay a certain sum of money at a definite time to bearer or to a specified person on his order. Promissory notes are generally used as evidence of debt. The holder of a note made payable to bearer may transfer his rights to another by delivery of the note. If the note is payable to order, it may be transferred by endorsement and delivery.

Cite this article
Pick a style below, and copy the text for your bibliography.

  • MLA
  • Chicago
  • APA

"promissory note." The Columbia Encyclopedia, 6th ed.. . Encyclopedia.com. 16 Aug. 2017 <http://www.encyclopedia.com>.

"promissory note." The Columbia Encyclopedia, 6th ed.. . Encyclopedia.com. (August 16, 2017). http://www.encyclopedia.com/reference/encyclopedias-almanacs-transcripts-and-maps/promissory-note

"promissory note." The Columbia Encyclopedia, 6th ed.. . Retrieved August 16, 2017 from Encyclopedia.com: http://www.encyclopedia.com/reference/encyclopedias-almanacs-transcripts-and-maps/promissory-note

promissory note

prom·is·so·ry note • n. a signed document containing a written promise to pay a stated sum to a specified person or the bearer at a specified date or on demand.

Cite this article
Pick a style below, and copy the text for your bibliography.

  • MLA
  • Chicago
  • APA

"promissory note." The Oxford Pocket Dictionary of Current English. . Encyclopedia.com. 16 Aug. 2017 <http://www.encyclopedia.com>.

"promissory note." The Oxford Pocket Dictionary of Current English. . Encyclopedia.com. (August 16, 2017). http://www.encyclopedia.com/humanities/dictionaries-thesauruses-pictures-and-press-releases/promissory-note

"promissory note." The Oxford Pocket Dictionary of Current English. . Retrieved August 16, 2017 from Encyclopedia.com: http://www.encyclopedia.com/humanities/dictionaries-thesauruses-pictures-and-press-releases/promissory-note