| An unconditional, written and signed promise, | | | | • It should mention the due dates of the |
| made to a money lender, by the borrower, to | | | | payments of both principal and interest. |
| pay a certain amount of money, either on | | | | • Terms and conditions of penalties or |
| demand or at a certain fixed date in the future, is | | | | payments before due dates should be mentioned. |
| called as a Promissory Note in legal terminology. | | | | • It ought to consist of the late fees |
| Such notes are formulated between two or more | | | | assignment as well. |
| individuals. | | | | • This note might contain information on |
| This note does not require any precise words of | | | | payment and repayments or details on the |
| contract, because, legal effect is an unconditional | | | | installment payments. |
| promise of payment. The intention of a party to | | | | • A Promissory note should be checked, |
| make the payments is also, thus, evident. Like a | | | | read and signed by the borrower and the loan |
| ‘bill of exchange', this note is not drawn on | | | | officer. |
| any third party holding the lender's money. | | | | When a Promissory note is made, the relation |
| A sample note will contain the following essential | | | | between the two parties is immaterial. This note |
| content: | | | | can be made between any two persons. Usury |
| • Date of the making of the note, which | | | | laws can be applicable in some cases; this depends |
| is supposed to be signed. | | | | entirely upon the laws of the state where the |
| • It should contain complete legal names | | | | note is been made and implemented. |
| of both the parties. | | | | The security and legal terms should be stated as |
| • The address, on which the payment will | | | | clearly as possible. This part of this agreement will |
| be sent, should be stated and verified. | | | | consist of any law suits imposable on the |
| • If applicable, the interest rates should be | | | | borrower in lieu of his inability to pay off the |
| stated. | | | | borrowed money to the lender. |