A written promise to pay a sum of money, to a specified individual or organization, at a specified time in the future, and that is not always supported by a guarantee.
For example, when a business borrows $50,000 from a family member to fund a startup, it signs a promissory note specifying the principal amount, 5% annual interest, and a repayment schedule of $900 per month over 5 years — creating a legally enforceable debt obligation.
Why it matters: It is the foundational legal document of debt; without it, enforcing repayment in court is incredibly difficult.
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