In it simplest terms, a promissory note is a written promise to repay a loan or debt under specific terms - usually at a stated time, through a specified series of payments, or upon demand. A promissory note will clearly identify the parties, the amount of the obligation, and if necessary, the consideration for the obligation, that is, what the debtor has already received or will receive in return for signing the note. The note will also include the terms of repayment, whether that be in one lump sum or at stated intervals, and, if applicable, the interest rate which will apply. It may also include an “acceleration clause” which will make the entire amount of the note due if a payment is missed.

What follows is a specific guide to drafting key provisions found in most promissory notes.

Paragraph 1: Identifies the Parties, Sum, and the Repayment Terms

The first paragraph of a typical promissory note should begin by listing the parties involved (promissor and promissee), the sum demanded, and the date when or intervals at which the sum must be repaid. The first paragraph may also include the consideration for the debt. This can be a general provision such as “for value received”, or could spell out the services or goods that were the subject of the note, if applicable (i.e. legal services, medical services, etc.).

For example, the first paragraph of a typical promissory note might read:

“For value received, John Doe, on behalf of himself, individually, promises to pay to Jane Smith

About the author of this article:

mark warner is a legal research analyst for realdealdocs.com. realdealdocs gives you insider access to millions of legal documents drafted by the top law firms in the us. search over 10 million documents, clauses, and legal agreements for free at http://www.realdealdocs.com