What is a Promissory Note?
The promissory note is a title of credit that contains:
“An unconditional promise to pay a specified sum of money made by a person called the subscriber to another person called the beneficiary or holder.”
Its issuance, issue, endorsement, endorsement or acceptance and other operations recorded in it are acts of commerce.
Through a promissory note a person unconditionally agrees to pay another person a certain sum of money.
What should a Promissory Note contain?
According to the General Law of Securities and Credit Operations, the promissory note must contain:
- The mention of being a promissory note inserted in the text of the document.
- The unconditional promise to pay a specified sum of money.
- The name of the person to whom the payment is to be made.
- The time and place of payment.
- The date and place where the document is signed.
- The signature of the subscriber or of the person who signs at his request or on his behalf.
¿What are the consequences of the promissory note not having an expiration date?
If a promissory note does not mention the expiration date, it will be considered that the subscriber must pay it when the beneficiary or holder presents the document to him, that is when he places it at his sight.
What happens if the place of payment is not mentioned in the promissory note?
If a promissory note does not mention the place of payment, the place of payment will be deemed to be the domicile of the subscriber of the promissory note.
Can a promissory note be signed leaving the space for the amount to be paid blank?
A promissory note must necessarily have the indication of the unconditional promise of payment of a certain sum of money, it is an essential requirement, of existence of the document.
Indicating the amount of payment allows to have certainty of the scope of the obligation in charge of the subscriber.
What happens if the amount to be paid written in numbers is different from the one written in letters on the promissory note?
In the event that there is a difference between the amount to be paid written in numbers and the amount written in letters, the amount written in letters will be valid.
What happens if the document does not mention that it is a promissory note?
The mention that the document is a promissory note is one of the formal, essential and existence requirements of the promissory note, since if it did not contain this element it would be difficult to distinguish it from other documents or titles of credit and determine the legal effects of the document.
What happens if the promissory note does not contain the signature of the obligor to pay?
Through the signature arises the obligation of payment by the subscriber, without the signature, the promissory note has no legal effect.
The signature of the subscriber of the promissory note or of the person to whom it is requested to do so at his request, is one of the elements of the document's existence, an essential requirement since the signature is the manifestation of the will to comply with the obligation that the document contains, which is the promise to pay a specified sum of money.
Can the payment of interest be agreed or established in the promissory note?
Yes, the parties can agree on the payment of default interest by the subscriber, if the subscriber does not pay the determined amount of money contained in the document on the due date of the promissory note.
Can the parties freely agree on the amount to be paid for default interest?
Yes, the parties can freely agree on the amount to be paid for default interest.
However, according to Supreme Court of Justice of the Nation, agreeing excessive or disproportionate interest on a promissory note is prohibited and in the event that it is so agreed, the crime of usury is configured.
Are only already printed promissory note formats valid?
For a promissory note to be valid, it is enough that it meets the requirements established by law, regardless of whether it is a printed format or has been written in handwriting.
What happens if a person signs a promissory note?
The person who signs or subscribes a promissory note is obliged to pay the determined sum of money that is established in the document in favor of the beneficiary.
Who can sign a promissory note?
A promissory note can be signed by all those natural and legal persons who have the legal capacity to contract and be bound in accordance with the law.
Can a person sign a promissory note on behalf of another person?
Yes, a person can sign a promissory note on behalf of another, as long as that person has representation to sign titles of credit, which may be granted by power of attorney registered with the Public Registry of Commerce or by simple written statement addressed to the third party. with whom the representative will have to contract.
What are the consequences of signing a promissory note on behalf of another person without mentioning that it is being signed on behalf of another person?
If a person subscribes a title of credit without legal power or without legal authority to do so, he is personally bound as if he had subscribed it in his own name.
Can a promissory note be transferred?
The promissory note can be transmitted through endorsement and by delivery of the document.
"The promissory note is a title of credit and as such can circulate, that is, the document and the rights it protects can be transferred."
It can also be transmitted by assignment or by any other legal means.
What is the endorsement?
Through the endorsement, the holder of the document (endorser) expresses his will to transfer the document to another person (endosee). The endorsement must appear in the title of credit or on a sheet attached to it.
The endorsement is a form of transmission of a title of credit.
By means of the endorsement, the title can be transferred in property, in proxy or in guarantee:
- The proprietary endorsement transfers ownership of the document and all rights attached to it.
- The endorsement in procurement or collection does not transfer ownership but empowers the endorsee to collect the document extrajudicially or judicially.
- In an endorsement in guarantee, in pledge or in another equivalent, it attributes to the endorsee all the rights and obligations of a pledgee with respect to the endorsed title and the rights inherent to it, including the powers conferred by the endorsement in power of attorney.
What data should an endorsement contain?
The endorsement must meet the following requirements:
- Name of the endorser.
- Signature of the endorser or of the person who signs the endorsement at his request or on his behalf.
- The type of endorsement (“in property”, “in proxy”, “in guarantee”).
- The place and date.
How can payment of a promissory note be guaranteed?
The guarantor is the person who undertakes to pay the document jointly and severally with the signatory of the promissory note.
“The figure of the guarantee is a way of guaranteeing in whole or in part the payment of the promissory note.“
The guarantee must appear on the promissory note or on a sheet attached to it.
What happens if the signatory of the promissory note does not pay totally or partially the amount stipulated in the promissory note on the due date?
The holder of the document may require payment either extrajudicially or judicially.
Does the exchange action prescribe to claim the total or partial payment of the document?
Yes, the exchange action will prescribe in three years counted from the expiration date of the promissory note.
What legal actions does the promissory note holder have to claim full or partial payment of the document?
You will have the exchange action to claim payment of the amount of the promissory note, interest and expenses.
