Dear sir, thank you for putting forth this query.
A promissory note is a written and signed contract in which one party promises to pay a specified amount of money to the other party. The terms of a promissory can be tailored to the parties’ needs, as far as the amount borrowed, whether interest will be charged, the schedule or date by which the money must be repaid, and any other needed particulars.
Who is Promisor and Promisee in Promissory Note ?
There are two parties to a promissory notes – Maker and Payee. Relationship is of Promisor and Promisee. The person (maker of PN) who promise to pay the money is called the promisor (debtor) and person who is entitled to receive the money is called promise (creditor).
Types of Promissory Note:-
1. Demand Promissory Note :
Promissory Notes which are payable immediately on demand are called Demand Promissory Notes. There is no specification of a fixed period for repayment. It must be paid when demanded. Demand promissory note is governed by the Negotiable Instruments Act, 1881 and attracts stamp duty as per the Indian Stamps Act.
If a demand promissory note is unstamped or is under stamped it cannot be rectified even by paying a penalty. It even cannot be admitted as evidence in a court of law. Hence it must be ensured that the demand promissory note is duly filled in and sufficiently stamped before the borrower signs it.
2.Usance Promissory Notes are the Promissory Notes which are payable after a predecided definite period are called Usance Promissory Note. Usance PN also needs to be stamped.
Hope this helps! Goodluck!