Promissory Note

Posted in Finance, Accounting and Economics Terms, Total Reads: 1577
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Definition: Promissory Note

Promissory note is a negotiable instrument. It is formed between two parties. It is an instrument in which one part makes a promise without any conditions to pay a specified amount of money on demand of the other party at a future date.

The party who promises to pay and issue the promissory note is known as the maker or issuer.

Example:

A promissory note can be made between two friends wherein one friend issues a promissory note to the other friend promising that he/she will pay Rs. 10,000 after 2 years without any conditions.

 



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