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Lawyer for Promissory Note

Updated: October 20, 2023
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A lawyer for promissory notes can help you create a detailed financial statement related to the money owned by a person. A promissory note or letter is a legal document that specifies a contractual arrangement between two people. When the people involved in an agreement sign a legally drafted promissory note, it becomes a lawfully binding instrument that ties both parties to act according to their contract. A lawyer for promissory notes can help you create a comprehensive one with all the relevant details that make it legally binding in court.

What Does a Lawyer for a Promissory Note Do?

A lawyer for promissory notes assists in multiple common law issues, and this promissory note acts similar to a common legal contract. It specifies the expectations and provisions for an arrangement between two people. Moreover, a promissory note must fulfill numerous legal requirements, such as consideration, a clear promise to pay, and the signature of the promisor, to be lawfully implemented.

However, note that a promissory note might differ based on the cash or capital owned and the repayment of the given promissory note. In addition, a promissory note attorney prepares a promissory note to handle any loan as long as it fulfills the lawful precedents of an agreement to remain a legally binding contract.

What is a Promissory Note?

A promissory note is a debt tool that incorporates a documented assurance by one person (the note's maker or issuer) to pay another person (the note's payee) a specified sum of money, either on request or at a fixed future date. In addition, a promissory note generally comprises all the provisions about the indebtedness, such as the interest rate, principal amount, maturity date, place and date of issuance, and issuer's signature.

While financial institutions and banks might issue them, you might need to sign a promissory note to obtain a loan. Moreover, a promissory note allows people to obtain credit from a source other than a bank. According to the agreed-upon provisions, this source can be any person or a business ready to take promissory notes. Additionally, a promissory note should incorporate all the information regarding a loan and repayment terms. Along with the names of the lender and borrower, it may also include the following:

  • The total sum of funds being borrowed
  • The monthly payment sum
  • The number of payments
  • The interest rate
  • Penalties for default or nonpayment
  • Collateral requirements
  • Prerequisites under which the loan may be deferred or discharged

Moreover, when talking about repayment, there are several ways to organize the repayment of a promissory note. The most common provision for repayment is in easy installments, with the borrower making periodic payments against the interest and principal on loan.

Besides, arranging a lump-sum repayment for shorter loans may be more beneficial. Under this case, the buyer must repay the principal and interest sum at a predetermined date. Occasionally, a promissory note may define "on demand" repayment, indicating you must repay the loan sum at the lender's request.

Types of Promissory Notes

Here are some major types of promissory notes you must know about.

  • Investment Promissory Notes

    Offering or receiving promissory notes involves risk, even during a take-back mortgage. Therefore, to help reduce these threats, lenders or borrowers must register the promissory note or get it notarized so that the debt is publicly documented and lawful. Furthermore, in the case of a mortgage, the buyer of the note may even obtain an insurance policy on the promissory note issuer's life.

    These promissory notes are exclusively presented to corporate or high-level investors who can manage the threats and have the funds required to purchase the note (notes can get allocated for as extensive a sum as the purchaser is ready to take). In addition, after an investor has consented to the provisions of a promissory note, they can market it (or special payments from it), to another investor, like a deposit.

  • Corporate Credit Promissory Notes

    These Corporate Credit promissory notes are commonly used in companies as a short-term financing tool. For instance, when a business has marketed many goods but has yet to gather payments, it may stand low on cash in hand and be unable to settle its debts. In this circumstance, the company can ask the creditors to take a promissory note that can get exchanged for cash after it obtains payment from the debtors.

    Besides, the company might also ask a financial institution for spare cash by offering a promissory note. A promissory note provides a credible source for businesses that have used other options, like bond issues or corporate loans. Nevertheless, a promissory note issued by a business in this circumstance is at a higher risk of nonpayment. It also indicates the interest rate on a corporate promissory note offers a higher return than a bond from the same organization.

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Key Terms

  • Accounts Receivable (AR): The sum owed by clients or customers to a company after goods or services have been supplied or used.
  • Cash Flow (CF): Cash Flow defines a company's outflow and inflow of cash. The Net Cash Flow for some time is seen by taking the Opening Cash Balance and deducting the Final Cash Balance.
  • Insolvency: Insolvency is when a person or company can no longer fulfill financial commitments with the lender(s) when their deficits become due.


A promissory note is a documented commitment by one person to pay funds at a specified date in the future. Also, while banks and financial institutions may administer them, it is common for other businesses or common people to use promissory notes to document the agreed provisions of a loan. Moreover, to safeguard your legal rights, it is rational to work with our expert attorneys at ContractsCounsel, who can draft and review every promissory note you use.

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