Question

Under the Negotiable Instruments Act, 1881, what are the essential elements of a valid promissory note as per Section 4?

Q: Answer-Under the Negotiable Instruments Act, 1881, what are the essential elements of a valid promissory no...

Section 4 of the Negotiable Instruments Act, 1881, defines a promissory note as an unconditional written promise to pay a sum of money that is fixed or otherwise determinable. Key requirements 1 written promise not oral, 2 unconditional no conditions precedent, 3 definite sum of money in rupees, 4 at future date or on demand, 5 to a specified person or bearer, 6 signed by maker. If the promise is conditional e.g., I promise to pay if goods are delivered, it is not a promissory note. A promissory note creates primary liability on the maker the maker promises direct payment, distinguishing it from a bill of exchange requiring presentment.

A Written promise to pay, named payee, fixed amount, signed by maker

B Unconditional written promise to pay a definite sum, fixed or determinable at a future date, to a specified person or bearer, made by one person to another

C Verbal acknowledgment of debt followed by written confirmation

D Promise with conditions for payment depending on future events

E Mere statement of debt without formal promise to pay

Practice Next