Under Section 84 (1) of the Bill of Exchange Acts, a promissory note is an unconditional promise in writing made by one person to another, signed by the maker, engaging to pay on demand or at a fixed or determinable future time, a sum certain in money to or to the order of a specified person or bearer.
Characteristic/Elements/Essential of the Definition
1. It is an unconditional written promise made by a person to another
2. It must be signed by the maker
3. It contains a promise to pay a sum certain in money.
4. The sum is payable on demand or at a fixed or determinable future time.
5. The sum is payable to a specified person, his order or the bearer
Under Section 85(1) of the Act, a promissory note remains incomplete until it is delivered to the promisee. If a note is drawn by two or more persons, all are jointly and severally liable on it. Once a note is delivered to the promisee, it may be negotiated to other persons or it may be discounted.
A promissory note differs from a bill of exchange in that: –
1. It is a promise to pay made by the debtor It does not require presentation for acceptance nor does it require acceptance. However, it is a negotiable instrument capable being negotiated by one person to another in commercial transactions.