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What is a promissory note and when is the legal due date?

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:

  1. be in writing;
  2. be signed;
  3. contain a promise or order to pay;
  4. be unconditional;
  5. be for a fixed amount, be for money;
  6. contain no other undertaking or instruction;
  7. be payable on demand or at a definite time, and
  8. 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.

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