We explain what a promissory note is, the requirements that must be met to issue one and a model of this accounting document.
What is a promissory note?
It is known as a promissory note accounting document containing an unconditional promise of payment by a debtor or subscriber, in favor of another person (beneficiary or creditor).
In the same document specify the amount of said payment, the determined period of time that will be available to cancel the debt, and other similar conditions.
The name of this type of document comes from its initial line, which commonly begins with “I owe and promissory note”, a voluntary declaration of obligations. In this it is also distinguished from the letter or loan document: in that a promissory note it is drawn up and issued by the debtor himself, not by the beneficiary.
The origin of the promissory note is located in medieval times, with the rise of the bourgeoisie and early capitalism, as a form of loan document that allowed to disguise the collection of interest, an activity that Christian morality considered reprehensible.
The promissory note is delivered to the creditor and remains in his possession until the moment he comes forward to collect the debt. Then he will receive the promised sum and will deliver the document in exchange, which can only then be destroyed. Too it may be the case that the creditor receives a partial sum of the amount owed, but then you can withhold the note until the rest of the debt is paid.
Promissory note requirements
For a promissory note to be valid, it must comply with the following:
- Mention that it is a promissory note. The content of the document must expressly indicate that it is a promissory note, in the same language of the country in which it is signed and in a totally clear and legible manner.
- Unconditional promise of payment. A promissory note contains an unconditional promise of payment, that is, it makes an explicit obligation without extenuating circumstances, without conditions, which must be included in the document. It is not always necessary to emphasize it, simply that the payment does not present any form of conditioning.
- Name of the beneficiary and signature of the subscriber. The two parties involved, to whom the money is owed and the debtor, must be present on the document. The first with your full name specified, the second by signature and name at the end of the promissory note.
- Date and place of subscription. Every promissory note is signed in a place and at a time, and this must be recorded in the document in order to establish its relationship with the expiration date and with the legal framework that will protect it (that of the country where it is signed).
- Due date. The due date is the date the amount owed must be paid without delay. This date must be explicitly contained in the document.
- Transmissibility. The promissory note may be transmitted or endorsed to a third party, that is, to someone interested in “buying” the subscriber’s debt. Said endorsement must be total and pure, without conditions, or in part.
Promissory note
The following may be a valid model of promissory note:
I WILL PAY AT VISTA in ARGENTINE PESOS
The amount of $ ________
[Lugar y fecha de la firma]
I will pay unconditionally to citizen ___________, bearer of identity document number __________, or to his order the sum of [Monto en letras] Argentine pesos ($ [Monto en números]), for equal value received to my satisfaction. This promissory note will accrue compensatory interest from, and including, the date of its signature until, but excluding, the date of its full cancellation on the day [fecha de vencimiento]. Said interests will be calculated at a nominal annual rate of ______ percent (__%). This obligation in my charge must be paid in Argentine pesos for both capital and interest.
[Nombre y firma del suscriptor]
[Número de documento de identidad]