What actually does “Promissory Note” mean?

Contemporary life shows that there often happens a partner, whereto we have trustingly granted a sum of money as a loan, in the form of commodity credit or payment in installments starts hiding, lying that he/she is currently having financial difficulties and will soon repay it or directly states that he/she does not owe you anything! Here comes the question how the return of the money may be guaranteed and secured to the maximum extent. One of the forms of securing cash receivables is the signing of a “promissory note”.

The promissory note is a security, which proves the will of the person, who has issued it, that he/she assumes the obligation to return the sum to the creditor on the fixed date, called due date. This form of occurrence of an obligation was not widely used until recently, due to the lack of trust in the institutions, the economic fraud, and often because of the lack of knowledge of the possibilities and effect of such documents. Actually this form of financial relations has lots of advantages.

• The first of them is that in contrast to an ordinary receipt or loan contract, the promissory note may substitute the court grounds, whereby the debtor will be sentenced to pay the sum. It saves up expenses and time for court proceedings. Due to the high inflation, the time, needed for appeal against court decisions, devalues the obligation and makes it incommensurable with the initially granted money.
• Secondly, the promissory note leads to transposition of the burden of proof, in case the debtor decides to stop the instituted enforcement. This means that you do not need to prove that you have given the money, rather your debtor shall submit evidence that he/she does not owe the sum as per the document.

So, the promissory note (PN) is a suitable form of written, voluntary and preliminary settlement of financial relationships between merchants. It facilitates the business relationships and considerably shortens in terms of time the litigations and most of all the court expenses. To have at your disposal a PN, ensuring the easy and non-problematic collection of your receivables, however, the document shall be duly executed – something, which is compulsorily examined by the court prior to issuing the writ of execution.

The purpose of the lines below is namely to familiarize you with all required items of PN, for you to dispose with valid, pre-litigation enforcement grounds and to make use of the advantages of this security to the maximum extent.

• Firstly, the document shall contain the name “promissory note” in the language in which it is drawn up. The judicial practice is contradictory as regards the issue of whether the name shall only be contained in the title of the document. Our advice is: use the expression “promissory note” in the title, as well as in the text, to avoid any doubts of its nature.
• The PN shall contain an unconditional promise to pay a given amount of money. The unconditional character of the promise may be expressed as follows: “unconditionally promise”, “unconditionally and irrevocably undertake”, as well as other equivalent expressions. The exact sum of money due shall also be specified. Our advice is to enter the amount in digits, immediately followed by the sum, written in words in brackets.
• There shall also be specified the due date and place of payment. The due date is the moment, when the obligation becomes claimable. It may be determined in a number of manners: by specifying the exact date; by fixing a term after issuing the PN; upon presentation of the PN or specified term after that. Each of the manners equally guarantees your interests and depends on the agreements between you and the issuer.Note: If no due date is fixed, this does not compromise the PN – it is presumed that it is payable upon presentation. In case it is agreed that the PN is payable upon presentation, it shall be effected within one year as of its issuing, provided that this term may be changed by the issuer. If the place of payment is not specified, the place of payment is deemed to be the place, where the PN is issued.
• The name of the person, or of the order, that the payment shall be made to – our advice is the creditor to identify itself by its trade name, BULSTAT code, company file, address of management, as well as the particulars of the person, who represents it.
• Date and place of issuing – failure to state the place of issuing does not compromise the PN, the document is deemed issued on the place, specified next to the name of the issuer.
• Signature of the issuer – the issuer shall sign the PN by his/her own hand. Signing by a proxy is admitted; however, in this case we recommend requiring from the person, who will sign the PN in the capacity of a proxy, a power of attorney, certified by a notary public. The power of attorney shall be express and in the PN there shall be reflected that it is signed by a proxy.