What is a Promissory Note?
Promissory Note is a legally binding financial instrument for purchasing goods and borrowing money. The person promises the other party to pay the certain amount fixed in the promissory note within the time frame specified in the Agreement. In case of default in payment the aggrieved has the right to take help of court of law. The promissory Note has to be in written form, oral promise to pay a certain amount does not become promissory note.
Why it is Important?
It is one of the important financial tool and provides a clear picture for the repayment of the debt and protects both parties from unnecessary hussels of lending practise. It also outlines the terms & condition, obligation , remedies , date of repayment of debts in the agreement in a clear and non- ambiguous manner. It is important because a promissory note Agreement is signed by both the lender and the borrower after agreeing on the terms and condition of the agreement. Therefore it is a legally binding financial instrument.
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