Promissory Note (Drafting)

A promissory note is a financial tool having legal enforceability which is declared by a party, promising another party to pay the debt on a specified day. It is a written agreement signed by drawer with a promise to pay the money on a specific date or whenever demanded. The promissory note is a short-term credit tool which is not related to any currency note or banknote. Depending upon the kind of promissory loan, promissory notes are of different types. When a loan taken from family or friends, personal promissory note comes into picture. Though people avoid making notes when seeking a loan from friends or relative, the promissory note shows belief and trust in the interest of the borrower.Commercial the note is made when dealing with commercial lenders such as banks. Most of the commercial promissory agreement is similar to personal notes.

Real estate note is similar to commercial notes in terms of non-payment consequences. If the borrower becomes a defaulter, then the party has the right to keep the property until the debt is cleared.The promissory note is occasionally used to raise funds for the business. It is used as a security purpose and managed by securities laws. All promissory notes constitute three primary parties. These include the drawee, drawer and payee.

Drawer: A drawer is a person who agrees to pay the drawee a certain amount of money on the maturity of the promissory note. He/she is also known as maker.

Drawee: She/He is an individual, in whose favour the note is prepared. In usual cases the drawee is also the payee until and unless the promissory note is transferred specifically in favour of the payee.

Payee: A payee is someone to whom the payment is made.

Documents Required

Passport Photo

Passport photo of all parties.

PAN Card

PAN card of all parties.

Aadhar Card

Aadhar card of all parties.

Utility Bill

Utility bill of Electricity or Telephone.

Address Proof

Valid Address Proof of all the parties.


Valid Driving Licence of all the parties.

Terms and Conditions

Terms and Conditions between the parties.

Other Documents

Other documents will be intimated through e-mail.


A promissory note is a contract, a binding agreement that someone will pay your business a sum of money. However under some circumstances, for instance, if the note has been altered, it wasn't correctly written, or if you don't have the right to claim the debt then in such cases, the contract becomes null and void.

Promissory notes are legally binding documents. Someone who fails to repay a loan detailed in a promissory note can lose an asset that secures the loan, such as a home, or face other legal actions.

Promissory notes are legal tool that any individual can use to legally bind another individual to an agreement for purchasing goods or borrowing money. A well-executed promissory note has the full effect of law behind it and is legally binding on both parties.

A promissory note need not be witnessed or notarized to be valid and enforceable. Those factors may be useful if the signer denies that it is his signature, but they are not necessary to sue and recover on the note.

A promissory note must state that it's either “payable to order” or “payable to bearer.” These phrases mean the amount owed by the borrower could be payable to some unknown third party in the future. This means a promissory note is transferrable from one person to another.

Even if a promissory note is lost, the legal obligation to repay the loan remains. Borrowers may not avoid foreclosure on their property, for example, simply on the basis of a lost promissory note.

Although a promissory note is usually written on a computer and printed out or a pre-made form is filled out, a handwritten promissory note signed by both parties is legal and will stand up in court.

Demand promissory notes are notes that do not carry a specific maturity date, but are due on demand of the lender. Promissory notes may be used in combination with security agreements. For example, a promissory note may be used in combination with mortgage deed.