Also known as: promissory note · note
Written by attorneys · grounded in primary & secondary sources — see below
A signed writing containing an unconditional promise by one party to pay a fixed sum of money to the bearer or to order on demand or at a definite time.
Pearl Porter borrowed $200,000 from Prosperity Investments to buy a warehouse. She signed a promissory note promising repayment in monthly installments and granted a mortgage on the warehouse to secure that note. When Pearl later claimed the loan agreement was void for lack of consideration, Prosperity sought to foreclose. The court examined whether a valid underlying obligation existed before allowing enforcement of the mortgage.
Prism Analytics needed capital and its board authorized issuance of 10,000 shares to Pilar Pena. Pilar delivered a promissory note promising payment of $150,000 over three years. The board determined the note constituted adequate consideration. Once Prism received the note, the shares became fully paid and nonassessable.
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Paige Porter signed a promissory note promising to pay Prime Logistics $75,000 for custom software development. A sudden government embargo then made performance of the development contract impossible. Prime sued on the note. The court considered whether the supervening event discharged Paige's duty to pay under the note.
Pablo Perez executed an international will leaving his estate to his niece. Because he could not sign due to injury, another person signed his name at his direction while the authorized person noted the reason on the document. The will referenced a promissory note Pablo held as an asset. The court assessed whether the note passed under the properly executed will.
Portia Price paid the final installment on her promissory note to Patriot Insurance. The insurer returned the original note marked paid and recorded a satisfaction of the mortgage that had secured the note. When a junior lienholder later challenged title, the court examined whether the recorded satisfaction cleared the lien created by the note.
Priya Prasad orally agreed to sell equipment to a buyer who signed a promissory note for the price. Weeks later the buyer sent a signed letter confirming the note terms. When the buyer refused payment, Priya sued on the note. The court considered whether the later letter satisfied the statute of frauds for enforcement of the note.
A security interest in a promissory note is perfected upon attachment under UCC § 9-309(4) when the transaction is a sale. For a non-sale security interest, filing or possession perfects the interest.
Full payment of the note, including prepayment when permitted, entitles the mortgagor to a release or satisfaction of the mortgage and reconveyance of title if the mortgagee held title.
The board of directors may authorize issuance of shares in exchange for a promissory note if the board determines the consideration is adequate.
If the obligation secured by a mortgage or other security device is discharged, the mortgage may be extinguished or become unenforceable.
…disclose, however, no ground upon which this court can declare the contracts in question contrary to public policy. We note that were the Maryland Retail Installment Sales Act, Art. 83 §§ 128-153, or its equivalent, in force in the District of Columbia, we could grant appellant appropriate relief. We think…