---

name: draft-promissory-note
description: Use when drafting a promissory note — an unconditional written promise to pay a certain sum on demand or at a future date. Covers the mandatory elements for negotiable-instrument status (Geneva Convention / commercial codes), optional provisions (interest, acceleration, cross-default, endorsement), and critical MENA-specific issues (KSA Sharia interest treatment, UAE criminal dishonor risk, LB/EG commercial code requirements). Triggers on "promissory note", "note payable", "iou", "acknowledgment of debt", or "سند أذني" requests.
license: MIT
metadata:
id: draft.promissory-note
category: draft
practice_area: banking
jurisdictions: [UAE, DIFC, ADGM, KSA, LB, EG, FR, UK, US, OHADA]
priority: P1
intent: [promissory note, note payable, iou, negotiable instrument, سند أذني]
related: [draft-loan-agreement, draft-guarantee, draft-mortgage, draft-security-agreement]
source: Louis — HAQQ Legal AI (github.com/sboghossian/mini-claude-for-legal)
version: "1.0"

Promissory Note (سند أذني / Billet à Ordre)

When to use this

A promissory note is an unconditional written promise by one party (the Maker) to pay a fixed sum of money to another party (the Payee) or their order, on demand or at a specified future date. When properly drafted, it is a negotiable instrument — it can be transferred by endorsement, sued on without proving the underlying obligation, and enforced summarily in most jurisdictions.

Use this skill when:

• Formalizing a straightforward loan obligation between two parties
• A lender wants a standalone instrument separate from the loan agreement (for ease of enforcement)
• Acknowledging existing indebtedness in a legally enforceable form
• Part of a transaction package (e.g., a promissory note as a component of a real estate transaction)
• Creating an instrument that a Payee can discount, transfer, or use as collateral

A promissory note is simpler than a full loan agreement — use [[draft-loan-agreement]] when the transaction requires covenants, representations, events of default, security arrangements, or syndication.

Mandatory elements for negotiable-instrument status

Per the Geneva Convention on Bills of Exchange and Promissory Notes (and most civil-law commercial codes derived from it), a promissory note must contain:

Element	Why mandatory	Example
1. Designation as "Promissory Note"	Identifies the instrument type	"PROMISSORY NOTE" or "سند أذني" (Arabic) or "Billet à Ordre" (French) in the title
2. Unconditional promise to pay	Negotiable instruments cannot be conditional — "I will pay if X happens" destroys negotiability	"The Maker hereby unconditionally and irrevocably promises to pay..."
3. Sum certain	A fixed, calculable amount	USD 500,000 (five hundred thousand United States Dollars)
4. Payee identification	To whom payment is made	"Pay to the order of [Payee Name]"
5. Maturity	When payment is due	"On [Date]" / "On demand" / "At sight" / "30 days after sight"
6. Date and place of issue	Establishes jurisdiction and limitation period start	"Issued in [City], [Country], on [Date]"
7. Maker's signature	Unconditional acceptance of the obligation	Maker's authorized signature; for companies, authorized officer + company stamp (where required)
8. Place of payment	Where the Payee presents the note	"[Bank name and branch]" or "[Address]"

If any mandatory element is missing: the instrument may lose its status as a negotiable promissory note and become merely an ordinary acknowledgment of debt — enforceable as a contract but not summarily enforceable as a bill of exchange.

Optional provisions

Interest

• State the rate: "[X]% per annum, calculated on the outstanding principal from [Issue Date] until payment in full"
• Basis: "on a 365/actual-day basis" or "30/360" — specify to avoid calculation disputes
• Compounding: "interest shall not compound" (default for simple notes) or specify if interest compounds
• KSA caution: see Jurisdictional notes — interest should be characterized as a "profit charge" or "administrative fee" in KSA-governed instruments

Default interest

• "If the principal or any interest is not paid on its due date, default interest shall accrue on the overdue amount at [X]% per annum above the stated rate" from the due date until actual payment

Acceleration clause on default

• "If the Maker fails to pay any amount due hereunder on its due date and such failure continues for [5] business days, the full outstanding principal and all accrued interest shall, at the Payee's option, become immediately due and payable without further notice or demand"

Cross-default

• "Any default by the Maker under [the Loan Agreement / any other financial obligation to the Payee] shall constitute a default under this Note"
• Cross-default provisions are appropriate when the promissory note is one component of a broader financing; otherwise they add complexity without benefit

Joint and several liability (multiple makers)

• "Each Maker is jointly and severally liable for the full amount of this Note"
• The Payee can pursue any one Maker for the full amount; that Maker's right to contribution from the others is separate

Endorsement / transfer

• "This Note is transferable by endorsement and delivery"
• OR: "This Note is non-transferable without the Maker's prior written consent"
• If no endorsement restriction is included, the note is freely transferable as a negotiable instrument

Waiver of presentment, demand, protest

• "The Maker hereby waives presentment, demand, notice of dishonor, and protest"
• These formalities (traditional requirements for enforcing bills of exchange) are commonly waived in commercial promissory notes; verify whether the governing law requires specific waiver language

Governing law

• "This Note shall be governed by and construed in accordance with the laws of [jurisdiction]"

Jurisdiction / enforcement

• "[Courts of [jurisdiction]] shall have exclusive jurisdiction for disputes arising from this Note"
• OR: "This Note may be enforced in any court of competent jurisdiction"
• Consider including attorney's fees provision: "In any action to enforce this Note, the prevailing party shall be entitled to recover its reasonable attorneys' fees and costs"

Jurisdictional notes

Jurisdiction	Key requirements
Lebanon (LB)	Commercial Code (Code de Commerce libanais) — Articles on promissory notes (billets à ordre / سند أذني); execution of judgment available via "ordonnance sur requête" procedure; fast enforcement through commercial court summary proceedings
France / OHADA	Code de Commerce / OHADA Uniform Act on Securities; same Geneva Convention-based framework; swift enforcement by summary proceedings
Egypt (EG)	Commercial Code — promissory notes (سند إذني); registration not required; enforcement by summary proceedings available
KSA	Promissory notes enforceable under Saudi Commercial Code; but interest: under Sharia principles, pure interest on money loans (riba) is prohibited. Restructure: (a) characterize the return as a "compensation for cost of capital" / "administrative fee" or (b) use an Islamic finance structure. Work with local counsel to confirm that the interest characterization will be accepted by the Saudi courts or arbitral tribunal
UAE federal	Commercial Transactions Law (Federal Law 18/1993 as amended); promissory notes enforceable; criminal dishonor: under UAE criminal law, issuing a promissory note without adequate funds or stopping payment on a note without legal justification may constitute a criminal offense (analogous to check fraud). Verify current law before taking commercial notes — the criminal dimension affects the risk profile significantly
DIFC / ADGM / UK / US	Full negotiable-instrument law applies; Geneva Convention framework (UK Bills of Exchange Act 1882; US UCC Article 3); freely transferable; summary enforcement available
Negotiable instrument vs acknowledgment of debt	A note that contains conditional language, lacks a fixed sum, or is missing mandatory elements becomes an ordinary contractual debt rather than a negotiable instrument. Enforcement then requires proving the underlying obligation — slower and more complex

Anti-patterns

• Vague IOU language: "I, [Name], owe [Other Name] USD 100,000" — does not constitute a negotiable promissory note; becomes only a contractual debt acknowledgment; no summary enforcement
• Conditional promise: "I will pay USD X when the project is completed" — destroys negotiability; the condition must be satisfied before a court can enforce
• Omitting the unconditional promise: "I intend to pay USD X on [date]" — "intend" introduces uncertainty; use "unconditionally promise to pay"
• Incorrect rate calculation: specifying "5% interest" without stating the basis (per annum, per month, simple, compound, day-count) leads to disputes
• UAE criminal exposure: taking a promissory note from a counterparty who may not have funds to pay — investigate the Maker's financial position first; criminal dishonor is a serious risk in UAE commercial practice

Document template (core)

PROMISSORY NOTE

[City, Country], [Date]

FOR VALUE RECEIVED, [Maker Full Name / Company Name, a [company type] incorporated in 
[jurisdiction] with registration number X] (the "Maker") HEREBY UNCONDITIONALLY AND 
IRREVOCABLY PROMISES TO PAY to the order of [Payee Full Name / Company Name] (the 
"Payee") the principal sum of [CURRENCY AND AMOUNT IN WORDS] ([Currency Symbol][Amount 
in Figures]), together with interest at the rate of [X]% per annum on the outstanding 
principal, from the date hereof until paid in full.

This Note shall be due and payable on [MATURITY DATE / ON DEMAND].

Payment shall be made to [Payee bank account details / Payee's address] in immediately 
available funds in [Currency].

This Note is governed by the laws of [Jurisdiction].

IN WITNESS WHEREOF, the Maker has executed this Note on the date first written above.

MAKER:

________________________
[Full Name]
[Title, if corporate]
[Company Name, if corporate]
[Date]

[Witness or notarization block if required by jurisdiction]

Related skills

• [[draft-loan-agreement]]
• [[draft-guarantee]]
• [[draft-mortgage]]
• [[draft-security-agreement]]