Carl Glendon

What Does A Promissory Agreement Include?

A promissory note refers to a type of financial instrument that involves a written promise. In this kind of note, one party who is the maker or the issuer of the note gives an assurance to another party - who is the payee of the note - that a specific amount of money will be paid at a particular future date or on demand.

This kind of financial instrument is often used when there is some problem with immediate payment of finances and the person or entity from whom payment is expected can extricate self out of the situation by introducing this kind of a note. Read and find out what a promissory agreement contains.

What Does a Promissory Note Include?

A Promissory Note is actually a type of debt instrument which represents a written promise from the issuer to make the payment of a certain sum of money to another party.

It includes the terms agreed on between two parties such as the principle amount, the interest amount, the date of maturity etc and has the signature of the issuer of course. A promissory note actually offers the ability to entities other than financial institutions like banks to offer lending systems to other entities.

A corporate credit promissory note is one of the instances of a promissory note in New York. In case of such a form of promissory note, generally a short term loan is sought by a company. For a growing startup with cash crunch at the time of expansion of operations, the terms of the agreement could include that the loan is paid back by the company after it manages to collect its accounts receivable.

Various other kinds of promissory notes are also there in existence such as student loan promissory notes, take back mortgages and investment promissory notes.

In case of investment promissory notes, unless the note is registered, it is important for an investor to analyze whether or not the company can pay the debt back. In such cases, in case of a default of payment, the legal avenues of the investor might be somewhat limited in nature. Companies that are facing serious financial problems might hire high commission brokers in order to push unregistered notes out in public.

Author Bio

Carl writes often about legal drafting and help.