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Private Promissory Note for India

Private Promissory Note Template for India

A Private Promissory Note is a legally binding financial instrument governed by Indian law, particularly the Negotiable Instruments Act, 1881. It represents a written, unconditional promise made by one party (the maker) to pay a specified sum of money to another party (the payee) at a predetermined date or on demand. The document includes essential elements such as the promise to pay, specific amount, maker's signature, and clear identification of parties involved. Under Indian jurisdiction, these notes must comply with stamp duty requirements and can be used as evidence of debt in legal proceedings.

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Private Promissory Note

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What is a Private Promissory Note?

A Private Promissory Note serves as a formal documentation of debt and promise of payment under Indian law. This instrument is commonly used in various financial transactions, from personal loans to business financing, where one party commits to paying a specific sum to another. The document's primary purpose is to create a legally enforceable record of debt, governed by the Negotiable Instruments Act, 1881, and other relevant Indian legislation. Private Promissory Notes are particularly useful in situations requiring documented proof of debt without the complexity of a full loan agreement. They must include specific components such as the amount promised, payment terms, and parties' details to be legally valid. These notes are widely used due to their simplicity, legal recognition, and enforceability in Indian courts.

What sections should be included in a Private Promissory Note?

1. Place and Date: Specific location and date of execution of the promissory note, which is crucial for enforcement and limitation period calculations

2. Maker's Details: Full legal name and address of the person making the promise to pay (the debtor)

3. Payee's Details: Full legal name and address of the person to whom the payment is to be made (the creditor)

4. Promise to Pay: Clear, unconditional promise to pay with the specific amount written both in figures and words

5. Payment Terms: Specific details about when and how the payment will be made, including due date and payment method

6. Interest Rate: Clear statement of the applicable interest rate, if any, and how it will be calculated

7. Signature Block: Space for maker's signature, with revenue stamp if required by local stamp duty laws

What sections are optional to include in a Private Promissory Note?

1. Witness Details: Details and signatures of witnesses, recommended for higher value promissory notes

2. Security/Collateral: Description of any security or collateral provided against the promised amount

3. Default Provisions: Consequences of default in payment and remedies available to the payee

4. Prepayment Terms: Conditions under which early payment is allowed and any associated penalties or benefits

5. Governing Law: Specific mention of jurisdiction, though implied as Indian law for domestic promissory notes

6. Force Majeure: Provisions for unforeseen circumstances affecting payment capability, though rare in promissory notes

What schedules should be included in a Private Promissory Note?

1. Payment Schedule: If payments are to be made in installments, detailed schedule of payment dates and amounts

2. Collateral Details: If security is provided, detailed description of the collateral including any identifying numbers or characteristics

3. Bank Account Details: Specified bank account information for payments, if applicable

Authors

Alex Denne

Head of Growth (Open Source Law) @ Ƶ | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Jurisdiction

India

Publisher

Ƶ

Document Type

Promissory Note

Sector

Banking

Cost

Free to use
Relevant legal definitions



















Clauses



















Relevant Industries

Financial Services

Banking

Real Estate

Small and Medium Enterprises

Manufacturing

Retail

Professional Services

Construction

Agriculture

Educational Institutions

Relevant Teams

Legal

Finance

Treasury

Credit Control

Accounts Receivable

Risk Management

Corporate Secretarial

Debt Collection

Business Operations

Relevant Roles

Chief Financial Officer

Finance Manager

Legal Counsel

Corporate Lawyer

Credit Manager

Accounts Receivable Manager

Treasury Manager

Loan Officer

Business Development Manager

Risk Manager

Company Secretary

Financial Controller

Collections Manager

Industries





Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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