Bill of Exchange

According to the Negotiable Instruments Act , a promissory note is defined as an instrument in writing (not being a bank note or a currency note), containing an unconditional undertaking signed by the maker, to pay a certain sum of money only to or to the order of a certain person, or to the bearer of the instrument. However, according to the Reserve Bank of India Act, a promissory note payable to bearer is illegal. Therefore, a promissory note cannot be made payable to the bearer. This definition suggests that when a person gives a promise in writing to pay a certain sum of money unconditionally to a certain person or according to his order the document is called is a promissory note.

Following features of a promissory note emerge out of the above definition: It must be in writing It must contain an unconditional promise to pay. The sum payable must be certain. It must be signed by the maker. The maker must sign it.

It must be payable to a certain person. It should be properly stamped.