Introduction To Promissory Notes
What Is A Promissory Note?
A promissory note is a legally effective secured instrument with no fixed format. It can be called a promissory note as long as it meets the requirements of the “promissory note” stipulated in the Negotiable Instruments Law. After the invoicer has issued a promissory note, he should unconditionally pay the amount on the promissory note to the payee or holder according to the amount recorded on the promissory note and the due date.
To meet the economic benefits and the nature of security, the Negotiable Instruments Law stipulates that as long as the statutory requirements of a promissory note are met, the court will recognize the promissory note and issue a “promissory note ruling” (what is a promissory note ruling? Please refer to Another article on this site: [link]). If the drawer misses the time for protesting the promissory note ruling, the promissory note ruling will be confirmed, and the holder or payee can directly apply for enforcement with this “determined promissory note ruling” (how does enforcement work? Please refer to Another article on this site: [link]), seized or seized the property of the invoicer. Because there is no process to prove why the other party paid the money, the efficiency of the court judgment will be much faster than that of ordinary civil litigation.
Therefore, if the invoicer has already paid within the time limit according to the amount recorded in the promissory note and the due date, he must remember to get the promissory note back from the payee or ensure that the other party has destroyed the promissory note so that the other party will not take the promissory note again. Apply for a promissory note ruling.
When Will The Promissory Note Be Used?
It is likely to be used whenever one party needs to pay the other party. The most common is when borrowing money, or when signing any contract.
If there is no way to receive the money from the other party immediately, but you are worried that the other party will refuse to pay later, you will ask the other party to issue a promissory note of a specific amount to guarantee that he will pay. As long as the other party fails to pay as agreed upon due, it can apply to the court for a promissory note ruling, and then quickly apply for enforcement.
How To Write The Promissory Note?
There are many fixed-format blank or commercial promissory notes sold on the market. As long as the correct information is filled in, it will be a valid promissory note:
But in fact, there is no need to spend money to buy a promissory note, as long as there is a piece of paper that correctly records the “necessary items” of the promissory note, it can still be a valid promissory note.
(1) Necessary items to be recorded [It will take effect as long as it is recorded]
- Record the word “promissory note”
- Record “Unconditionally responsible for payment”
- List a certain amount of money
- Record the signature or seal of the invoicer (note that if the signature is not the real name, but the court thinks it is enough to identify a specific person, it is still valid, and you need to be responsible for the promissory note!)
- Record “invoice date: the date of the Republic of China” (note that this is the date of issuing this promissory note, not the date of payment!)
(2) Items to be recorded [it is valid if it is recorded, and it will not affect the validity if it is not recorded]
- Payee’s name or trade or company name
- Personal information such as ID card, phone number, address, etc.
- Invoice location
- Where to pay
- expiry date
- Record “endorsement transfer prohibited”
- Agreed interest (how to agree? Please refer to another article on this site: [link])
- PS does not record the due date (or pay on sight), nor does it record the payee’s promissory note, the amount must be more than 500 yuan.
(3) Matters not to be recorded
- Matters that are not valid in the negotiable instrument law: (It may still have the usual legal effect)
- (1) Liquidated damages: There is no provision for liquidated damages in the negotiable instrument law, so this agreement does not affect the negotiable instrument law. However, if there is a record, it is still possible to claim liquidated damages by ordinary civil procedures.
- Recording invalid/useless matters: (The recorded matters themselves have no effect)
- (1) Endorsement and addition conditions: If the endorsement is marked with words such as “please pay rent only”, only this condition has no effect in the law of negotiable instruments. However, the endorsement text (that is, the name of the endorser) still has the effect of endorsement.
- (2) Record the words “the holder may designate the place of payment”: This record is not stipulated by the Negotiable Instruments Act and has no effect on the instrument, so the record has no effect.
- (3) Marking parallel lines: Although the check has the requirement of parallel lines, other bills do not have this requirement, and this requirement is not allowed. Therefore, if a parallel line is marked on a promissory note, it should be regarded as having no record of parallel lines. This parallel line has no effect.
- Harmful recorded matters: (The record will make the whole promissory note invalid)
- (1) Violation of the record of unconditional payment: If there are conditions or restrictions on the payment recorded on the promissory note, such as: “No prompt or cash, only guarantee”, etc. Words that contradict “unconditional payment” shall be deemed to have not recorded “unconditional payment”, and the promissory note is therefore invalid.
- (2) Other matters that are inconsistent with the essence of the negotiable instrument law may make the promissory note invalid if it is recorded.
- Because the law does not stipulate which items are useless and which are harmful, in addition to the above, other matters need to be judged on a case-by-case basis, so it is recommended to ask a lawyer first, or simply do not record “necessary records” and “Matters other than those that have to be recorded” will be less of a problem.