Section 4 of the Negotiable Instrument Act, 1881 speaks about Promissory Note. Under this section, a Promissory Note means, an instrument in writing, containing an unconditional undertaking signed by the maker to pay a certain sum of money only to or to the order of certain person or to the bearer of the instrument, not being a bank note or currency note.
(a) I promise to pay B or order Rs. 1000/-
(b) I acknowledge myself to be indebted to X in Rs. 5000/- to be paid on demand for value received.
Must be in writing and signed by the maker.
Must contain an undertaking to make payment.
The undertaking must be unconditional.
Money and Certain sum of money. i.e, the amount payable must be certain.
The payee must be certain.
Every Negotiable Instrument has to be in writing and shall be signed by the maker. Therefore an oral promise to does not become a promissory note.
It is essential that there must be a promise to pay or an undertaking to pay. Mere acknowledgement of any debt doesn’t amounts or constitute a valid Promissory Note.