A promissory note is an instrument involving
two parties in two capacities. One party, the "maker" promises to pay a second
party, the payee, a stated sum of money, either on demand or at a stated future
date. The note may range from a simple "I promise to pay $X to the order of Y"
form or more complex legal instruments such as installment notes, collateral
notes, mortgages, and judgment notes.
"Time Note" is a note payable at a future
date.
"Demand Note" is a note payable upon the
request of the payee or demand of the payee or holder.
For an instrument to be negotiable it must contain within its
four corners all the information required to determine whether it is
negotiable. To be negotiable, the instrument must:
- be in writing;
- be signed;
- contain a promise or order to pay;
- be unconditional;
- be for a fixed amount, be for money;
- contain no other undertaking or instruction;
- be payable on demand or at a definite time, and
- be payable to order or to bearer.
If these requirements are not met, the instrument is not
negotiable, and the rights of the parties are governed by the law of contract.