CPT Query

Question

In case of promissory notes, what is unconditional order and unconditional promise?

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CA, CS, CMA asmanojku 2 months 1 Answer 71 views 0

Answer ( 1 )

  1. A promissory note must contain a promise to pay certain  sum of money.  The promise to make payment must be unconditional    meaning there should not be  any conditions attached to the promise  as when to pay the specified money

    Example : “I promise to pay rs 10000 as soon as possible” is not a  promissory note because it contains  the condition as soon as possible

    In promissory note there is unconditional promise… But in bills of exchange there is an unconditional order

    So in that case a promissory note is an unconditional promise to pay and bills of exchange is an unconditional order to pay

    In promissory note  the payer promises to pay but in case of bills of exchange  drawee (the one who has to pay)  has to accept the bill  drafted by the drawer duly signed.

    In promissory note there are only two parties but in bills of exchange there can be more than  two parties

    Promissory note doesn’t  constitute a legal liability  but bills of exchange results in legal liability

    Hence bills of exchange is an order while promissory note is a promise  But both should be unconditional

    Example  of promissory note in daily life is : cheques and  currency notes

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