Vietnam: What is a promissory note? Contents of the promissory note

Vietnam: What is a promissory note? Contents of the promissory note (Source: Internet)

1. What is a promissory note?

According to Clause 3, Article 4 of the Law on negotiable instruments 2005, a promissory note means a valuable paper created by an issuer, undertaking to pay unconditionally a specific sum upon demand or upon a fixed time in the future to the beneficiary.

2. Content of promissory note

The content of the promissory note under Article 53 of the Law on negotiable instruments 2005 provides as follows:

(1) A promissory note must include the following contents:

- The words "Promissory Note" written on the front of the promissory note;

- An undertaking to make unconditional payment of a fixed sum of money;

- The period for payment;

- The place for payment;

- The name of the beneficiary being an organization or the full name in the case of the beneficiary being an individual designated by the issuer or in whose favour [the issuer] has made the request for payment of the promissory note to the order of the beneficiary or the request for payment of the promissory note to the bearer2 .

- The place and date of signing and issuance;

- The name of the issuer being an organization or the full name in the case of the issuer being an individual, and the address and signature of the issuer.

(2) A promissory note which omits any one of the contents stipulated in clause 1 of this article shall be invalid, except for the following cases:

- Where the place for payment is not recorded on the promissory note, the place for payment shall be the address of the issuer;

- Where the place of signing and issue is not recorded on the promissory note, the place of signing and issuance shall be the address of the issuer.

(3) When the amount of money written in figures on a promissory note is different from the amount of money written in words, the amount of money written in words shall be valid for payment.

Where the amount of money in a promissory note is written twice or more in words or in figures and they are different, the smallest amount of money written in words shall be valid for payment.

(4) Where a promissory note does not have sufficient space for writing, it may have an additional sheet attached. The sheet shall be used for recording details of a guarantee, endorsement, pledge or collection.

The person who is the first to prepare an additional sheet must attach it to the promissory note and sign across the edges of the additional sheet and the promissory note.

3. Provisions on obligations in promissory notes in Vietnam

3.1. Obligations of the issuer in Vietnam

According to Article 54 of the Law on Negotiable Instruments 2005, the obligations of the issuer of a promissory note are as follows:

The issuer of a promissory note shall be obliged to pay the sum stated in the promissory note upon maturity to the beneficiary and shall have other obligations as an acceptor of a bill of exchange as prescribed.

3.2. Obligations of first endorsers of promissory notes in Vietnam

According to Article 55 of the Law on Negotiable Instruments 2005 stipulates that The first endorser of a promissory note shall have the obligations as the drawer of a bill of exchange according to the provisions of Article 17 of the Law on negotiable instruments 2005 as follows:

- The drawer shall be obliged to pay the sum in the bill of exchange to the beneficiary when the bill of exchange is dishonoured by non-acceptance or by non-payment.

- Where the endorser or the guarantor has made payment of the bill of exchange to the beneficiary after the bill of exchange was dishonoured by non-acceptance or by non- payment, the drawer shall be obliged to pay the sum stated on such bill of exchange to the endorser or the guarantor.

4. Payment in full of promissory notes in Vietnam

Article 56 of the Law on negotiable instruments 2005 provides that a promissory note shall be deemed to have been paid out in full in the following circumstances:

- When the issuer becomes the beneficiary of the promissory note upon the date of maturity or after that date.

- The issuer has paid the beneficiary the full sum stated in the promissory note.

- The beneficiary cancels the promissory note.

Quoc Dat

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