| Promissory Note |
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The terms of a note typically include the amount, the Interest Rate if any, and the Maturity Date . Sometimes there will be provisions concerning the payee's rights in the event of a Default , which may include foreclosure of the maker's interest. Demand promissory notes are notes that do not carry a specific maturity date, but are due on demand of the lender. Usually the lender will only give the borrower a few days notice before the payment is due. For loans between individuals, writing and signing a promissory note is often considered a good idea for tax and recordkeeping reasons. A promissory note differs from an IOU in that the latter is a simple acknowledgement of the existence of a debt owed, whereas a promissory note, as its name implies, contains an affirmative undertaking to pay the amount stated. In the United States , a promissory note that meets certain conditions is a Negotiable Instrument governed by Article 3 of the Uniform Commercial Code . Negotiable promissory notes are used extensively in combination with Mortgage s in the financing of Real Estate transactions. Other uses of promissory notes include the capitalization of corporate finances through the issuance and transfer of Commercial Paper . At various times in history promissory notes have acted as a form of privately issued Currency . In many jurisdictions today, bearer negotiable promissory notes are illegal precisely because they can act as an alternative currency. Conversely, however, all Scottish Banknotes are effectively standardised demand promissory notes, although they are rarely cashed. SEE ALSO EXTERNAL LINKS
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