PROMISSORY NOTE. Part IV of the Bills of Exchange Act, 1882, is devoted to promissory notes. Section 83 defines a promissory note as follows : " (1) A promissory note is an uncon ditional promise in writing made by one person to another signed by the maker, engaging to pay, on demand or at a fixed or determin able future time, a sum certain in money, to, or to the order of, a Specified person or to bearer.
" (2) An instrument in the form of a note payable to maker's order is not a note within the meaning of this section unless and until it is indorsed by the maker.
" (3) A note is not invalid by reason only that it contains also a pledge of collateral security with authority to sell or dispose thereof.
" (4) A note which is, or on the face of it purports to be, both made and payable within the British Islands is an inland note. Any other note is a foreign note." . .
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If a note on demand does not include a promise to pay interest, interest cannot legally be enforced.
" Section 85. (1) A promissory note may be made by two or more makers, and they may be liable thereon jointly, or jointly and severally, according to its tenor.
" (2) Where a note runs, ' 1 promise to pay,' and is signed by two or more persons, it is deemed to be their joint and several note." The following is a specimen of a joint and several promissory note :— A note which is written by John Brown in the form, " I, John Brown, promise to pay," etc., is valid, without his signature appearing at the foot, but variations from the usual forms should be discouraged.
A note drawn at so many months' notice has been held to be in accordance with the Bills of Exchange Act.
When several persons sign a promissory note, the note is usually worded " We jointly and severally promise to pay," and each person signing the note is liable for the full amount. If, however, the note is worded " we jointly promise to pay," it is a promisz by the combined parties and each person is not individually liable for the whole amount. In a joint note all the makers must be sued together ; but in a joint and several note each may be sued separately or they may all be sued jointly.
The regulations of the Bills of Exchange Act regarding the presentment for payment of a promissory note are given in Sections 86 and 87. (See PRESENTMENT FOR PAYMENT.) To be valid, a promissory note must not be payable upon a contingency, such as the arrival of a ship.
Sections 88 and 89 provide as follows : " 88. The maker of a promissory note by making it " (1) Engages that he will pay it according to its tenor ; " (2) Is precluded from denying to a holder in due course the existence of the payee and his then capacity to indorse.
" 89. (1) Subject to the provisions in this Part and, except as by this Section provided, the provisions of this Act relating to bills of exchange apply, with the necessary modifications, to promissory notes.
" (2) In applying those provisions the maker of a note shall be deemed to correspond with the acceptor of a bill, and the first indorser of a note shall be deemed to correspond with the drawer of an accepted bill payable to drawer's order.
" (31 The provisions as to bills do not apply to notes ; namely, provisions relating to " (a) Presentment for acceptance ; " (b) Acceptance ; " (c) Acceptance supra protest " (d) Bills in a set.
" (4) Where a foreign note is dishonoured, protest thereof is unnecessary." A promissory note made by a banker, payable to bearer on demand, is called a bank note, but bank notes for 20s., or more, and under 15, are prohibited in England. In Scotland and Ireland bank notes for LI and upwards are issued. There is no limit as to the amount of other promissory notes.
A promissory note (except a bank note) cannot be re-issued. Bank notes may be re-issued as often as desired.
If a person is induced by fraud to sign a promissory note, he may, unless negligence is shown, be held not to be liable thereon. This was the decision in the case of Lewis v. Clay (1897. 14 T.L.R. 149i, where a person was induced to sign under the belief that he was witnessing a signature.