According to Article 73 of my country’s “Bills of Exchange Law”, a promissory note is a note issued by the drawer, promising to pay a certain amount to the payee or holder unconditionally upon seeing the note. Article 74 also stipulates that the drawer of a promissory note must have a reliable source of funds to pay the amount of the promissory note and guarantee payment.
A promissory note is an unconditional written promise issued by one person to another to pay a certain amount to a person or his designated person or holder upon seeing the note or at a fixed time or at a certain future time. In short, a promissory note is a note on which the drawer promises to the payee to pay a certain amount unconditionally.
The bills of exchange laws of various countries have different provisions on the content of promissory notes. According to the provisions of my country’s “Bills of Exchange Law”, a promissory note must record the following items: the words “promissory note”, an unconditional payment promise, a certain amount, the name of the payee, the date of issue, and the signature of the drawer. If one of the prescribed items is not recorded on the promissory note, the promissory note is invalid.
Promissory notes can be divided into commercial promissory notes and bank promissory notes. Promissory notes issued by industrial and commercial enterprises or individuals are called commercial promissory notes or general promissory notes; those issued by banks are called bank promissory notes. Commercial promissory notes can be divided into two types according to the time of payment: sight promissory notes and time-determined promissory notes. Sight promissory notes are promissory notes payable on sight, while time-determined promissory notes are promissory notes that promise to pay the bill at a specified or determinable date in the future. Bank promissory notes are all sight promissory notes. According to Article 78 of my country’s Bills of Exchange Law, my country allows the issuance of bank promissory notes with a payment period of no more than 2 months from the date of issue.
According to my country’s Bills of Exchange Law, bank promissory notes are only issued by banks or other financial institutions approved by the People’s Bank of China.
Differences between promissory notes and bills of exchange
As payment instruments, promissory notes and bills of exchange both belong to the category of bills of exchange, but they are different. The main differences are:
(1) There are two parties on the face of a promissory note, namely the drawer and the payee; while there are three parties on a bill of exchange, namely the drawer, the payee and the payee.
(2) The drawer of a promissory note is the payee, and a long-term promissory note does not need to go through the acceptance procedure; while a long-term bill of exchange does need to go through the acceptance procedure.
(3) In any case, the drawer of a promissory note is the absolute principal debtor. Once payment is refused, the holder can immediately request a court ruling to order the drawer to pay; while the drawer of a bill of exchange is the principal debtor before acceptance, and after acceptance, the acceptor is the principal debtor and the drawer is in the position of a secondary debtor.