What is a promissory note and what consequences are related to signing it?
A promissory note is a security. A person who has the rights to a promissory note may require the debtor to pay the amount specified in the promissory note, and if it is not obtained in a relatively simple and quick manner, it may be pursued through court actions and, later on, enforcement proceedings.
There is a basic division into promissory notes (in which the person who signs the promissory note agrees to pay) and bills of exchange (in which it is indicated that an acceptor, i.e. a person different than the one signing the promissory note, is liable to pay).
A promissory note must be in writing and should contain the following elements:
- the name “promissory note” in the text of the document itself, in the language in which it was issued;
- an unconditional declaration to pay a designated sum of money;
- designation of the date of payment;
- designation of the place of payment;
- the name of the person on whose behalf or on whose order the payment is to be made;
- designation of the date and place of issue of the promissory note;
- signature of the issuer of the promissory note;
In the case of the so-called bill of exchange, the name of the person to pay (the acceptor) must also be included. In order for the acceptor to be liable to pay the promissory note, they must sign the promissory note. Although issuing a promissory note usually finds a legal basis in legal relations between the parties, promissory note liability is of an abstract nature. The promissory note does not indicate the reason for its issuance.
As a rule, it does not affect the validity and implementation of the promissory note liability.
From the creditor's point of view, having a promissory note is an indispensable prerequisite for the existence of their promissory note authorisations and a premise of formal legitimacy at the same time. This means that the court with which the creditor submits the promissory note to obtain the payment order will not take into account why the note was issued or whether the claim is “right”, but simply check the formal correctness of the promissory note and issue a payment order.
The promissory note rights are transferred trough the so-called endorsement, i.e. a written statement on the promissory note. However, the promissory note of the consumer handed over to the creditor in order to meet or secure the service resulting from the consumer credit agreement should include the “not on order” clause or another equivalent.
This means that such a promissory note cannot be sold through endorsement.
A promissory note is a relatively convenient and cheap form of collateral for loans or credits. Promissory notes are used i.a. to secure liabilities and possible claims for damages or claims for repayment of the credit granted. Most often, the person to whom the collateral is granted receives a promissory note to fill in it by writing the amount covered by the secured liability as the promissory note sum and the maturity date of the secured liability as the promissory note payment date, and other provisions. The authorisation to fill in the promissory note is an element of the agreement of the person handing the blank promissory note and its recipient. If the declaration of the person handing the blank promissory note is in writing, the mentioned agreement is usually called a promissory note declaration. Such an agreement includes an authorisation for the owner of an incomplete promissory note to complete the promissory note.
As a result of filling in a blank promissory note in accordance with the agreement regarding its supplementation, a promissory note liability is created for a person signed on the promissory note (handing the promissory note or promissory note guarantors) with the content specified in the text resulting from the completion of the document. Please remember that the signature of any person except the promissory note issuer on the so-called front of the promissory note is considered a guarantee. The promissory note guarantor’s responsibility is the same as whom they have guaranteed for. The guarantor's liability is valid, even if the liability which they guarantee for has been invalid for any reason, except for a formal defect. Promissory note guarantors cannot effectively revoke a guarantee even if it pertains to an incomplete promissory note, which does not include the promissory note sum and the date of payment at the date of issue.
Claims against the main debtor (in case of a promissory note, it is the issuer and their guarantor) expire after 3 years from the date of payment. The claim from the promissory note against the issuer and the guarantors expires after 3 years, also when the promissory note has been as incomplete in order to secure a particular claim. The limitation period is interrupted on general principles, i.e. those resulting from the Civil Code. The limitation period is interrupted i.a. by any act before a court or other body appointed to hear cases or execute claims of a given type or before an arbitration court, taken directly in order to seek, determine, satisfy or secure a claim. In the event of the limitation period being interrupted by the action in court or other body appointed to hear cases or enforce claims of a given type or before an arbitration court, or by initiating mediation, the limitation period limitation does not run again until the proceedings are completed.
The payment order is a decision issued in the proceedings by writ of payment. Among others, it is issued on the basis of a promissory note presented by the claimant and does not require a hearing. An appeal against this decision may be allegations in which it is possible to indicate the circumstances from which it can be concluded that the blank promissory note has been filled out contrary to the promissory note agreement