What is a Promissory Note?
A Promissory Note is a financial instrument in which one party (the maker) promises in writing to pay a determinate sum of money to another (the payee), either at a fixed or determinable future time or on demand. It is governed by Section 4 of the Negotiable Instruments Act, 1881.
Essential Features
- Must be in writing
- Contains an unconditional promise to pay
- Signed by the maker
- Specifies a definite sum of money
- Payable to a certain person or to the bearer
- Payable on demand or at a fixed time
Parties Involved
- Maker: The person who makes and signs the note, promising to pay.
- Payee: The person to whom the payment is to be made.
Legal Aspects under Bangladeshi Law
In Bangladesh, a promissory note must comply with the conditions set in the Negotiable Instruments Act, 1881. It is considered a legal document and can be produced in court for recovery if dishonored.
Example Format
“I, Md. Sohel Rana, promise to pay Mr. X or order the sum of BDT 50,000 only on or before 30th August 2025.”
