What is a promissory note and what happens if you don’t pay it on time? This explains the law in Mexico – El Financiero

2023-12-24 06:14:16

In the world of financial transactions, promissory notes represent a fundamental tool for formalizing payment commitments.

Promissory notes are like written promises that state that a person owes money and agrees to pay by a specific date. They work like legal agreements: you lend money or sell something, and the other person signs a promissory note promising to give you or return that amount to you on a certain date.

When it comes time to pay the promissory note, it is crucial to understand how it is done. Imagine that it is like cashing a check, you must make sure that the other person or company complies with what was agreed. This involves presenting the promissory note on the agreed date and at the indicated place to receive the money. It is essential to follow the correct steps to avoid problems and ensure that the agreement is fulfilled, here we explain.

What is a promissory note in Mexico and what is its format?

A promissory note is a legal document that establishes a commitment to pay. In it, the person who signs it agrees to pay a specific amount of money to another person on a specific date.

The promissory note is made up of three essential aspects: first, who makes the payment and who receives it; secondly, the exact amount of money that is agreed to be paid; and finally, the specific date on which said payment must be made.

What are the elements of a promissory note and how to fill it out?

To avoid any misunderstanding related to the date or amount of payment, you need to know the elements that make up a promissory note:

First of all, make sure that the document has the word “Promissory Note”Date and place of issueDate and place of maturityAmount to be paid with numberAmount to be paid in writingName of the person who must payName of the person to whom it must be paidSignature of the person who must pay must pay

How to make a valid promissory note?

If the document has all the mentioned elements, it is a valid promissory note. You must pay special attention to this because you may have problems if you omit any of the data.

If the payment due date is not mentioned on the promissory note, you can be charged whenever or if the amount is left blank, you can be charged any amount.

According to the website of the Judiciary of Coahuila, if the document does not explicitly say that it is a promissory note, the legal effects cannot be determined, which could make the process to demand payment difficult.

Promissory note Types of promissory notes and methods of payment.

What are the types of promissory notes?

There are different examples of promissory notes depending on the issuer, the payment method or the time of payment. These are some classified by BBVA:

Transmitter

Promissory note issued by a bank. They are provided by the bank in the form of a checkbook. The banking institution prints the promissory notes and delivers them to the applicantCorporate or company promissory note. A company issues them and establishes requirements that the recipient must meet in order to benefit from the payment.

Way to pay

I will pay for deposit into account. In this case, payment can only be made by deposit into a bank account with crossed promissory note. It has two parallel lines that cross the document, similar to a crossed check and with the same conditions. The crossing in a promissory note indicates that the collection must be made by deposit in a bank account and not in cash

Payment time

I will pay immediately. They are settled at the moment they are presented for collection. Fixed date promissory note. Sets the precise expiration date of the Variable Term Promissory Note document. A period of time is added during which the maturity date is calculated after its issuanceIndefinite promissory note. Similar to an instant promissory note but without a specific maturity date. It is completed at the same time that the transferable promissory note is to be collected. It can be assigned to a third party who acquires the right to collectNominative promissory note. Similar to transferable promissory notes, but without the name of the beneficiary written on it. They can also be transferred to third parties

When does a promissory note mature in Mexico?

This is determined on the maturity date of the promissory note and will depend on what is agreed between both parties. It is important to keep in mind that if the payment is not made on the established date, it loses its validity.

If you have saved a promissory note, you can collect it as long as no more than three years have passed from the expiration date, as indicated in article 165 of the General Law of Credit Titles and Operations.

According to Contraktomx, three years is the period that a beneficiary has to demand payment of a promissory note through judicial means. This measure is known as exchange action and is applied in case of non-payment or partial payment.

How to collect a promissory note and what to do if it is not paid?

In order to receive payment for a promissory note, it is necessary to collect it at the established place and date.

In case of non-payment or partial payment of the promissory note, the beneficiary can proceed to court through direct exchange action and return, notes Justia México.

The direct exchange action is exercised against the subscriber or his guarantor and the return action against the endorsers or guarantors. A guarantor is the person who is jointly and severally obligated to cover the amount agreed upon by the beneficiary, while the endorser is the person to whom the promissory note is transferred.

Through these actions, the beneficiary can claim payment of the full amount of the promissory note, default interest from the day of maturity and other legitimate expenses.