Blank promissory notes, also known as incomplete promissory notes, are usually used for loans and borrowings. Although they lose their significance from year to year, they are still in common circulation. What are they, actually? Is it safe to sign such document?
A promissory note and a blank promissory note
A promissory note is a special type of security in which one person, i.e. the exhibitor (expertly a trainee) undertakes to repay a certain amount of money to the other person, i.e. the addressee (remit) – its form is strictly defined by bill of exchange law. On the basis of such a document, the addressee may demand payment of the amount contained therein from the exhibitor.
But what is a blank promissory note?
It’s a type of bill of exchange that is not completely filled in, i.e. it lacks some information, e.g. the amount due, the addressee’s details, date or place of payment. Usually it’s issued with an empty space designated for information about the so-called bill of exchange sum (i.e. the amount of debt).
What should be included in the bill of exchange?
For a promissory note to be valid, it should be made in writing, contain a payment order for a specific sum of money (bill of exchange) and the word “promissory note” placed in the text of the document itself – in the language in which the document was issued. It must also be signed by the exhibitor. It should also contain the following fields:
- date and place of payment,
- date and place of issue of the promissory note,
- details of the person obliged to pay the bill of exchange sum,
- details of the person to whom the repayment is to be made.
Promissory note declaration – what’s that?
A blank promissory note should be accompanied by a so-called promissory note declaration. The document should clearly specify how and under what circumstances the promissory note may be supplemented, in particular which missing elements of the promissory note may be later added to it.
This is a fairly important document that protects debtors against dishonesty of creditors. Why? Due to the fact that the blank promissory note does not usually specify the amount of debt, the creditor may, in principle, enter any amount in it and demand its repayment – a promissory note declaration prevents him from doing so.
Are blank promissory note loans safe?
Although blank promissory notes have many advantages for creditors and are a good way to secure debts, they can cause many problems for debtors. Why? Bills of exchange pose a significant risk, among other things, because the creditor may transfer his rights from the bill of exchange to another person.