Promissory Note Share For Free

A written promissory note is a note payable for the borrower and it is a note receivable for the lender. Hence, the promissory note is a liability for the borrower and it is an asset for the lender. To illustrate, let's assume that Local Retailer borrows $20,000 from its bank and signs a promissory note.

Promissory notes are a type of financial instrument known as negotiable instruments.While a promissory note involves two parties (the payer and the payee), checks involve three parties (the payer, the payee, and the bank from which the funds are drawn).

In general, at least the borrower should sign the promissory note. Depending how much the parties trust each other, you may also wish to have the lender sign as well AND get the signatures notarized.

Parties of Promissory Note All promissory notes constitute three primary parties. These include the drawee, drawer and payee. Drawer: A drawer is a person who agrees to pay the drawee a certain amount of money on the maturity of the promissory note. He/she is also known as maker.

On a check, the payee is the person or organization to whom the check is written. For online payments, you provide payee (or recipient) information when setting up automatic transfers.

Promissory notes are a common type of financial instrument in loan transactions. As the payer of such a note, it's important to know that, unless a note expressly stipulates that it is not negotiable, promissory notes are negotiable instruments that can be transferred or assigned by the original payee to a third party.

Transferable . A promissory note must state that it's either payable to order or payable to bearer. These phrases mean the amount owed by the borrower could be payable to some unknown third party in the future. In other words, the note is transferrable from one person to another.