Promissory Note

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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.


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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