Promissory Note Definition:

An unconditional, written and signed promise to pay a certain amount of money, on demand or at a certain defined date in the future.

In Byles on Bills of Exchange, 25th Edition ( London: Sweet & Maxwell, 1983), authors M. Megrath and F. Ryder write, at page 317:

"No precise words of contract are essential in a promissory note providing that the legal effect is an unconditional promise to pay and also that there is evidence of the intention of the parties to make a promissory note."

A promissory note is similar to, but differs from, an IOU.

Canada's Bills of Exchange Act (Revised Statutes of Canada 1985, Chapter B-4, at §176, published at canlii.org/ca/sta/b-4/) defines a promissory note as:

"... an unconditional promise in writing made by one person to another person, signed by the maker, engaging to pay, on demand or at a fixed or determinable future time, a sum certain in money to, or to the order of, a specified person or to bearer."

Contrary to a bill of exchange, a promissory note is not drawn on any third party holding the payor’s money. It is a direct promise from the payor to the payee.