Promissory Note

A promissory note, also called an “order note” in the law, is a negotiable instrument containing the maker’s direct promise to pay. Unlike a cheque, it is not an instruction to a bank but the maker’s own undertaking.

Mandatory Elements (TCC Article 776)

• The word “bono” or “order note” in the text
• An unconditional promise to pay a specified sum
• Maturity
• Place of payment
• The person to whom or to whose order payment is to be made (payee)
• Date and place of issue
• Maker’s signature

A document lacking any of these is not a promissory note, subject to exceptions: a note without maturity is payable at sight; absent a place of payment, the place of issue is deemed the place of payment; absent a place of issue, the place next to the maker’s name applies (TCC Article 777).

Endorsement and Aval

A note may be transferred by endorsement, and endorsers are generally liable for payment. An aval is a security specific to negotiable instruments given for one of the parties; the guarantor is liable in the same way as the party it guarantees. Unlike suretyship, requirements such as spousal consent do not apply.

Enforcement and Limitation

• An unpaid note may be enforced through bills of exchange enforcement.
• Claims against the maker are time-barred three years from maturity; claims of the holder against endorsers one year from protest or, if the note bears a “no protest” clause, from maturity; claims between endorsers six months (TCC Articles 749 and 778).

In Practice

Promissory notes are also common in consumer transactions and leases, although special restrictions apply to having consumers sign notes in consumer credit and instalment sales. A document lacking the elements of a negotiable instrument may still be evidence of the debt as an ordinary written instrument.