We explain what a promissory note is, the requirements that must be met to issue one and a model of this accounting document.
What is a promissory note?
It is known as a promissory note accounting document containing an unconditional promise to pay by a debtor or subscriber, in favor of another person (beneficiary or creditor).
In the same document specifies the amount that said payment will consist of the determined period of time that will be available to pay off the debt, and other similar conditions.
The name of this type of document comes from its opening line, which commonly begins with “I owe and promissory note,” a voluntary declaration of obligations. In this it is also distinguished from the bill or loan document: in that a promissory note is written and issued by the debtor himself not by the beneficiary.
The origin of the promissory note dates back to medieval times, with the rise of the bourgeoisie and early capitalism, as a form of loan document that allowed the collection of interest to be disguised, an activity that Christian morality considered reprehensible.
The promissory note is delivered to the creditor and remains in his possession until the time he appears to collect the debt. You will then receive the promised sum and deliver the document in exchange, which can only then be destroyed. Also It may be the case that the creditor receives a partial sum of the amount owed but then you can retain the note until the rest of the debt is paid.
Promissory Note Requirements
For a promissory note to be valid, it must comply with the following:
- Mention that it is a promissory note The content of the document must expressly indicate that it is a promissory note, in the same language as the country in which it is signed and in a completely clear and legible manner.
- Unconditional promise to pay A promissory note contains an unconditional promise to pay, that is, it makes explicit an obligation without extenuating circumstances, without conditions, which must be included in the document. It is not always necessary to emphasize this, simply that the payment does not present any form of condition.
- Name of the beneficiary and signature of the subscriber Both parties involved, to whom the money is owed and the debtor, must be present on the document. The first with your full name stated, the second with a signature and name at the end of the promissory note.
- Date and place of subscription Every promissory note is signed in a place and at a time, and this must be stated in the document in order to establish its relationship with the expiration date and with the legal framework that will protect it (that of the country where it is signed).
- Expiration date The due date is the date on which the amount owed must be paid without delay. This date must be explicitly contained in the document.
- Transmissibility The promissory note may be transmitted or endorsed to a third party, that is, to someone interested in “purchasing” the subscriber's debt. Said endorsement must be total and pure, without conditions or in part.
promissory note model
The following may be a valid promissory note model:
SIGHT PAYMENT in ARGENTINE PESOS
The amount of $ ________
(Place and date of signature)
I will unconditionally pay to the citizen ___________, bearer of identity document number __________, or to his order the sum of (Amount in words) Argentine pesos ($ (Amount in numbers)), for equal value received to my entire satisfaction. This note will accrue compensatory interest from, and including, the date of its signature until, but excluding, the date of its full payment on one day (maturity date). Said interest will be calculated at a nominal annual rate of ______ percent (__%). This obligation under my responsibility must be paid in Argentine pesos for both capital and interest.
(Name and signature of subscriber)
(ID number)
