This is a note made in writing by somebody to pay someone else a certain sum of money on a definite day, or on demand. As a rule, such notes are negotiable, that is to say they are made out to Mr. X or Order, or Bearer. The man who makes the promise is the maker; the one to whom the money is to be paid is the payee; and if the note is sold before it becomes due, the difference between the sum indicated and that paid for it is the discount. The money is due on the date mentioned, but no action can be taken until three further days have elapsed, which are called the days of grace. Notes which mature on a Sunday, Christmas Day, or Good Friday are due the day previous, but notes maturing on a Bank Holiday are due the following day.
If no interest is payable on a promissory note, interest at 5% per annum can be charged, from the date when the principal became due until the date of actual payment. When a note is made payable on demand, it is as well to specify that interest is also payable from the date thereof, if that is the intention, as well as the agreed rate thereof.
The stamp duties on promissory notes are similar to those payable on bills of exchange for the same amounts, and promissory notes must be written on stamped paper, as they cannot be stamped after signature.
The stamped paper obtainable at the chief Post Offices for Bills of Exchange may also be used for Promissory Notes.