Monday, May 6, 2013

Explain Pro- Note

Pro-note means a Promissory Note as per Negotiable Instrument Act. Section 4 of the Negotiable Instrument Act, 1881  defines a promissory note as an instrument in writing (not being a bank note or a currency note) containing an unconditional undertaking, signed by the maker, to pay a certain sum of money only to or to the order of a certain person or to the bearer of the instrument

  • The Promissory Note has to be written, duly signed by the maker.
    Sample of Pro-note for concept
  • It should be properly stamped as per Indian Stamp Act. 
  • It must make a promise to pay and not an acknowledgement of indebtedness.
  • The amount payable must be certain.
  • It can be endorsed to a third party
  • Acceptance is not essential
The Parties to Pro Note are :
  1. The maker or Drawer :  The person who makes the note and promises to pay the amount stated there in.
  2. The Payee – The person to whom the amount is payable.
In case of the transfer of Promissory Note by payee to others, payee becomes  the Endorser.
  1. The Endorser :-  The person who endorses the note in favour of another person
  2. The Endorsee – The person in whose favour the note is negotiated by endorsement.

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