Difference between check and promissory note

Law
2023-04-25T21:30:28+00:00

Difference between check and promissory note

Introduction

Worldwide presence financial, there are different payment methods that can be used by people. Two of the most common are the check and the promissory note. Both are documents that have a similar function, but they also have significant differences.

What is a check?

A check is a document that orders a bank or financial entity to pay a certain amount of money to the person that presents it. The owner of the current account issues the check, which can be deposited in a bank account or collected in cash.

What is a promissory note?

On the other hand, a promissory note is a document in which a person agrees to pay a certain amount of money to another person on a specific date. Unlike the check, the promissory note does not require a banking or financial entity to be managed. Often, this document is used in the commercial field, where a company can obtain a loan from another company or financial institution.

Key differences

From

  • The check is issued by a person through his or her bank account.
  • The promissory note is issued by a person, company or financial entity.

Function

  • The check is used to make payments A person or entity.
  • The promissory note is used to contract a debt or to obtain a loan.

Warranty

  • The check does not provide any guarantee that the issuer's account has sufficient funds to cover the payment of the check.
  • The promissory note provides a guarantee to the recipient that the person issuing the document is committed to paying the amount due by a certain date.

Conclusion

In short, both the check and the promissory note have their uses in the financial world and are common documents. However, it is important to know the difference between the two to use the most appropriate one in each situation. If a payment needs to be made, a check is a good option. If you need to get a loan or incur a debt, then the promissory note should be used.

You may also be interested in this related content:

Related